FinCEN Publishes Interim Final Rule for CTA; Exempts U.S. Companies and Owners from Reporting Requirements

As promised, FinCEN announced an interim final rule and new filing deadlines for the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements on March 21, 2025. Under this interim rule, only foreign-owned companies are required to file BOI reports, and only for foreign owners. Domestic companies and beneficial owners who are U.S. persons are no longer required to report their information. 

Background of the Corporate Transparency Act 

The CTA was passed as part of the National Defense Authorization Act and signed into law by President Trump. As written, the law encompasses any company, foreign or domestic, that is: 

1. Formed by filing documents with a secretary of state or similar office, or 
2. Formed in a foreign country and registered to do business in the U.S. by filing documents with the secretary of state or a similar office. 

The law was written to be effective upon the publication of regulations by the Treasury. These final regulations were promulgated on September 30, 2022, and had staggered effective dates for companies based upon when they were formed. Companies had the following deadlines to file their initial report: 

1. Companies formed before January 1, 2024, had until January 1, 2025, to file, 
2. Companies formed on or after January 1, 2024, had 90 days from creation to file, and 
3. Companies formed on or after January 1, 2025, had 30 days from creation to file. 

Companies also had 30 days from the date of change or discovery of error to file updated or corrected reports.  

The Rocky Road to Implementation 

The CTA has had a rollercoaster ride over the course of its implementation. The law has faced significant legal challenges since its inception, and this has led to the law being blocked from full implementation off and on for the past few months. One legal challenge ended with a permanent injunction against enforcement of the law against any member of the National Small Business Association. Two more cases led to nationwide temporary injunctions against enforcement. One injunction eventually made it to the U.S. Supreme Court, which stayed the injunction and allowed enforcement to continue. These legal challenges and the resulting injunctions led to the January 1, 2025, deadline for companies formed before 2024 to change more than once. On February 18, 2025, FinCEN announced its intention to revise the reporting rule by March 21, 2025. 

Changes Under the Interim Rule 

The interim rule dramatically reduces the burden on domestic companies and owners. It revises the definition of “reporting company” to remove references to domestic companies and adds “domestic entity” to the list of exempt entities. Accordingly, any domestic reporting company that would have previously been required to file is now exempt from reporting both company and beneficial owner information. This is true even if the company has foreign owners. If they have already filed a report, they are no longer required to file updated or corrected BOI reports. 

Foreign companies are no longer required to provide BOI for any beneficial owners who are considered US. persons under the law. The definition of a U.S. person encompasses citizens and residents of the U.S. Foreign companies will have 30 days from the date of the publication of the interim final rule to file their initial reports or required updated/corrected reports if they have not already done so. (The rule is scheduled to be formally published on March 26, 2025, which would give a filing deadline of April 25, 2025.) Newly formed or registered foreign reporting companies have 30 days from the date of their registration to do business in the U.S. to file an initial report. 

Impacts of the Rule Change 

The interim final rule effectively guts the CTA. While FinCEN previously estimated that around 6-7 million businesses would be required to file each year after the initial report deadline, it now estimates that only 12,000 businesses will be required to file each year. In light of the final rule, some of the ongoing litigation has been paused to assess if the petitioners still have standing or if their claims are now moot.  

States may take up the charge and create their own versions of the CTA. New York has already passed its own version, though the law has not yet been implemented. Maryland and California have also seen legislation introduced that would create their own versions, but these have not passed and become law as of this time. The states would likely not run into the same constitutional challenges as the federal law has, though there may still be First and Fourth Amendment issues. 

It should be noted that the final interim rule is a regulation, not a law change. At any time, another rule could be promulgated to replace this rule and repeal the exemption for domestic reporting companies and beneficial owners that are U.S. persons. Congress could also revoke the rule within 60 days of its publication in the Federal Register under the Congressional Review Act, though that is not likely.  

After several months of uncertainty and changing deadlines, it seems that this interim rule will finally provide some certainty about BOI filing obligations – at least for now. Those with questions about how this change will impact them should reach out to legal counsel for guidance.