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If you’ve been following our periodic updates on the Corporate Transparency Act (CTA), it will come as no surprise that we have just that – another update. The CTA has been mired in legal challenges and uncertainty, particularly since its reporting rule took effect on January 1, 2024. However, this may be the final update as the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that removes the requirement for U.S. companies to report beneficial ownership information (BOI) to FinCEN under the CTA.
On March 2, 2025, the U.S. Treasury Department issued a press release stating that it would not enforce any penalties or fines associated with the BOI reporting rule under the existing regulatory deadlines, nor would it enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after forthcoming rule changes take effect.
The Treasury Department added that it would be issuing proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only, noting that this step is “in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
As promised, on March 21, 2025, FinCEN issued an interim final rule that narrowed the BOI reporting requirements to require only entities previously defined as “foreign reporting companies” to report BOI. Entities previously defined as “domestic reporting companies” do not have to report BOI to FinCEN, nor are they required to update or correct BOI previously reported to FinCEN. FinCEN further noted in its interim final rule that it intends to issue a final rule this year.
While foreign reporting companies remain subject to the BOI reporting requirements, this latest development will undoubtedly invoke a sigh of relief among U.S. small business owners, as well as legal and tax practitioners who have been tasked with following the constant changes to the CTA’s enforceability and advising their clients on reporting obligations.
For questions, please contact author Cole Henderson or a member of the CTA Team.