Starting Jan. 1, 2024, a significant number of businesses were required to comply with the Corporate Transparency Act (CTA), P.L. 116-283, passed by Congress in 2021. The CTA was enacted into law as part of the National Defense Act for Fiscal Year 2021. The CTA requires the disclosure of the beneficial ownership information (BOI) of certain entities from people who own or control a company.

 

The CTA is not a part of the tax code. Instead, it is a part of the Bank Secrecy Act, a set of federal laws that require record-keeping and report filing on certain types of financial transactions. Under the CTA, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), another agency of the Department of Treasury (Treasury).

 

FinCEN issued an interim final rule (IFR) on March 21, 2025, that removes the requirement for U.S. companies and U.S. persons to report BOI to FinCEN under the CTA.

 

Who is required to comply with the CTA’s BOI reporting requirement?

Foreign companies required to report under the CTA include corporations, LLCs or any similar entity that is formed under the law of a foreign country and registered to do business in any state or tribal jurisdiction by filing a document with a secretary of state or any similar office.

 

The IFR revised the definition of “reporting company” to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. state or tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”). FinCEN exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.

 

In addition, the IFR exempts foreign reporting companies from having to report the BOI of any U.S. persons who are beneficial owners of the foreign reporting company and exempts U.S. persons from having to provide such information to any foreign reporting company for which they are a beneficial owner.

 

When must companies file?

The CTA provides for different filing timeframes depending on when an entity is registered/formed or if there is a change to BOI.

 

·        New entities (created/registered in 2024) — must file within 90 days

·        New entities (created/registered after Dec. 31, 2024) — must file within 30 days

·        Existing entities (created/registered before Jan. 1, 2024) — Jan. 1, 2025

·        Reporting companies that have changes to previously reported information or discover inaccuracies in previously filed reports — must file within 30 days

 

Most reports were originally due by the Jan. 1, 2025, deadline; however, FinCEN pushed that date to Jan. 13, 2025, a deadline that nationwide injunctions made null. FinCEN subsequently pushed the deadline to March 21, 2025.

FinCEN then released the IFR on March 21, 2025. The new rule significantly narrowed the scope of BOI filing requirements to foreign entities only, formalizing a move Treasury previewed earlier that month. It also delayed by 30 days the filing deadline for foreign entities that were registered to do business in the U.S. before March 21, 2025.

 

Risk of non-compliance

The CTA provides for penalties for willfully not complying with the BOI reporting requirement; such noncompliance can result in criminal and civil penalties of $500 per day and up to $10,000 (unadjusted for inflation) with up to two years of jail time.