AM Law Alert Update : CTA Enforcement No Longer Applies to Domestic Entities
Do not shoot the messenger. There are further updates to report about the beneficial ownership information (BOI) reporting requirements for the Corporate Transparency Act (CTA), but this time they are good news.
After a pause due to ongoing litigation, the Financial Crimes Enforcement Network (FinCEN) announced two weeks ago that BOI reporting requirements were back in effect and mandatory. March 21, 2025, was given as the new reporting deadline for reporting companies. Last week, FinCEN announced that it was evaluating changes to its BOI rules and would announce further postponement before March 21st.
Now, in yet another revised update provided on March 2, 2025, FinCEN has changed course, suspending all enforcement of the BOI reporting requirements for U.S. citizens, domestic reporting companies and their beneficial owners. As such, although technically still legally required to do so, U.S. business owners will not be subjected to any fines or penalties for failing to file a BOI.
Per the March 2 press release, FinCEN will also officially modify its CTA rules so that only foreign entities will be required to file a BOI. Such a modification is expected to take place pursuant to an issuance of proposed rulemaking that will formally narrow the scope of the CTA so that it applies only to foreign reporting companies. Given such a proposed change, enforcement of the CTA against foreign reporting companies remains on hold until the “interim final rule” has been issued, which is expected to take place no later than March 21, 2025.
FinCEN’s current definition of a “domestic reporting company” is a corporation, limited liability company, and 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.
While we await the “interim final rule” from FinCEN, it’s important to keep in mind whether the entity with which you’re dealing is considered a domestic reporting company or a foreign reporting company for BOI filing purposes. Unless FinCEN changes its mind, which given its pedigree is certainly a possibility, the CTA will not be relevant or applicable to U.S. citizens or domestic entities.
For more information, please contact Conner Bourne.
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