After a 4-week hiatus, I am back again with what are likely to be the final updates on the Corporate Transparency Act (CTA) for a while (famous last words). For those of you tuning back in, this post relates to our firm’s series about the Corporate Transparency Act and Beneficial Ownership Information Reporting. Please follow the link here to see all our firm’s posts on this topic.
When I last posted about the CTA, I mentioned that the 5th Circuit had ruled to enable BOI reporting enforcement while the litigation worked its way through federal courts, and that FinCEN announced that it was planning on: (i) restarting enforcement of reporting requirements on March 21st and (ii) initiating rulemaking to further elaborate on the reporting requirements. Since then, there have been two developments. On March 2nd, the U.S. Department of Treasury (FinCEN is a bureau under the Department of Treasury) issued a press release where it announced that it would not enforce any penalties or fines related to BOI reports until further notice. On March 21st, FinCEN issued its interim final rule with a corresponding press release. To provide a quick procedural explanation, an interim final rule is essentially a regulation of a federal agency that becomes effective much sooner than the conventional federal rulemaking process. Given the typical months/years-long process of federal rulemaking, interim final rules allow federal agencies to roll out regulations on a quicker timeline. FinCEN is currently collecting public comment on the interim final rule, and it is supposed to consider those comments before issuing a final rule.
Now for the content of the rule. The rule does three core things. First, it excludes all domestic companies from the reporting requirements. Whereas the old version of the regulations defined a “reporting company” as either a “domestic reporting company” (basically any company formed under the law of a U.S. state or tribal government) or a “foreign reporting company” (a company formed under the laws of a foreign country and registered to do business in the United States), the interim final rule does not include “domestic reporting company” in its definition of “reporting company.” Second, any U.S. citizens that are beneficial owners of foreign reporting companies are exempt from the reporting requirements as a beneficial owner. Finally, foreign reporting companies are required to comply with the reporting requirements within 30 days of the issuance of the interim final rule (which is April 20, 2025), or if they are registered to do business in the United States after March 21st, then within 30 days of their registration. So to recap, only foreign reporting companies are required to report, they are only required to report beneficial owners to the extent that their beneficial owners are not U.S. citizens, and foreign companies must comply with these reporting requirements within 30 days of either the interim final rule or their registration to do business in the United States.
Now that the interim final rule is out, here are some takeaways:
- If you are a U.S. citizen and/or own a domestic company, you do not need to file a BOI report under the interim final rule.
- If you own a foreign reporting company, you will be required to report your beneficial owners who are not U.S. citizens.
- Getting reporting companies’ attorneys involved can help reporting companies interpret the interim final rule and make sure they are properly requiring with reporting requirements.
Thanks for reading!