Following months of legal challenges and uncertainty, the Corporate Transparency Act now undergoes further developments.
In her latest blog, KingSpry Business Law Attorney, Taisha K. Tolliver-Duran, Esq., reviews the latest Interim Final Rule and offers guidance to businesses as it pertains to compliance with the CTA.
Background
Until recently, the Corporate Transparency Act (the “CTA”) was a federal law that imposed filing requirements on nearly every corporation, limited liability company, or similar business entities formed in or registered to do business in the United States. Under the CTA, beneficial ownership information (“BOI”) was required to be reported to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”). Further, the CTA imposed severe penalties for failure to comply with reporting obligations.
Under the CTA, “domestic reporting companies” were defined as any corporation, limited liability company, or entity created by the filing of a document with a secretary of state (or similar office). Whereas “foreign reporting companies” were defined as any corporation, limited liability company, or entity formed under the law of a foreign country and registered to do business in the United States or tribal jurisdiction by the filing of a document with a secretary of state (or similar office).
Over the last several months, the CTA has been subject to multiple lawsuits, challenging its implementation and enforcement. Last month, it appeared as though the CTA would be taking effect. However, the Treasury Department recently announced that it would be suspending enforcement of the CTA against United States citizens and domestic reporting companies.
Treasury Department Suspends Enforcement
On March 2, 2025, the Treasury Department announced that it (1) will not enforce any penalties or fines associated with the BOI reporting rule under the existing CTA deadlines and (2) will not enforce any penalties or fines against United States citizens or domestic reporting companies or their beneficial owners.
FinCEN’s Position
On March 21, 2025, FinCEN acknowledged the Treasury Department’s announcement and issued an Interim Final Rule that intends to remove the requirement for domestic reporting companies and United States citizens to report BOI to FinCEN under the CTA.
The Interim Final Rule
The Interim Final Rule narrows the BOI reporting requirements under the CTA, as follows:
Domestic Reporting Companies. Entities previously defined as “domestic reporting companies” are no longer required to report BOI to FinCEN. Further, domestic reporting companies are no longer required to update or correct BOI previously reported to FinCEN.
Foreign Reporting Companies. Entities previously defined as “foreign reporting companies” are now referred to as “reporting companies”, and they are still required to file BOI reports with FinCEN, as set forth in the CTA. However, the Interim Final Rules exempts reporting companies from having to report BOI for any United States citizens that are also beneficial owners of their company.
Effective Date
The Interim Final Rule took effect on March 26, 2025. Reporting companies, formerly known as “foreign reporting companies”, are required to file and/or update BOI reports with FinCEN on or before April 25, 2025.
Comment Period
FinCEN is accepting comments on the Interim Final Rule until May 27, 2025. At that time, it will assess the comments and intends to issue a Final Rule later this year.
Key Takeaways for Businesses
Just as we have seen over the last several months, the fate of the CTA, and now the Interim Final Rule, are subject to change. While it is difficult to predict what regulatory changes or legal challenges may follow, businesses are encouraged to discuss their obligations under the CTA with legal counsel to determine whether they are required to file BOI reports with FinCEN.
