In a significant update for U.S. businesses, the Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report Beneficial Ownership Information (BOI) under the Corporate Transparency Act (CTA). This change from the U.S. Department of the Treasury aims to simplify compliance and reduce the administrative burden on domestic entities.
The interim final rule revises the definition of a “reporting company” to include only entities formed under the law of a foreign country that have registered to do business in any U.S. State or Tribal jurisdiction. These entities, previously known as “foreign reporting companies,” must file a document with a secretary of state or similar office to qualify as reporting companies. Importantly, entities previously classified as “domestic reporting companies” are now exempt from BOI reporting requirements.
With this new rule, all entities created in the United States, including those formerly known as domestic reporting companies, and their beneficial owners are exempt from the requirement to report BOI to FinCEN. This exemption is expected to streamline operations for many U.S. businesses, allowing them to focus on growth and development without the added complexity of BOI reporting.
Foreign entities that meet the new definition of a reporting company and do not qualify for an exemption must report their BOI to FinCEN under new deadlines. However, these entities will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not need to report BOI for any foreign entity for which they are beneficial owners.
Background on the Corporate Transparency Act
The Corporate Transparency Act (CTA), passed by Congress in 2021, initially required reporting companies to disclose the identity and information about beneficial owners. For new entities incorporated after January 1, 2024, companies were also required to disclose the identity of individuals who file applications to form corporations, limited liability companies, or similar entities.
The deadline for most reports was initially set for the start of 2025. However, FinCEN extended the deadline multiple times due to legal challenges and injunctions.
