What Businesses Need To Know About The Corporate Transparency Act
As noted in past client alerts available here, here and here, Corporate Transparency Act (CTA) enforcement of the Beneficial Ownership Interest (BOI) reporting requirement has been repeatedly delayed beyond the original Jan. 1, 2025, deadline.
Recent Developments
On March 2, 2025, FinCEN announced a temporary suspension of proposed civil penalties for domestic businesses that do not submit BOI reports, the announcement can be found here. FinCEN stated it was reassessing the rule to ensure it met national security needs without burdening small businesses.
On March 21, 2025, FinCEN announced an interim final rule that “domestic reporting companies” are exempt from filing a BOI report. “Foreign reporting companies” are still required to file a BOI report and must do so within 30 days of the rule’s publication. However, foreign reporting companies are exempt from providing the beneficial interest of any US person. The interim final rule can be found here.
A “domestic reporting company” is a corporation, limited liability company, or any other entity created by the filing of a document with a secretary of state or any similar office in the United States.
A “foreign reporting company” is an entity (including corporations and limited liability companies) formed under the law of a foreign country that have registered to do business in the United States by the filing of a document with a secretary of state or any similar office
What This Means For Businesses
With this recent shift, domestic reporting companies and their beneficial owners are exempt from CTA enforcement, and penalties for failing to submit BOI reports will not be applied. Companies created internationally with foreign ownership structures are subject to reporting.
Legal challenges to the new rule are possible but not expected Given the shift by FinCen, the outstanding case, Texas Top Cop Shop v Bondi will likely not change the current environment as the government will likely change its position in court to be in alignment with the most recent rule.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.