CTA Reporting Requirements Narrowed

On March 26, FinCEN published an interim final rule that narrows the existing BOI reporting requirements under the Corporate Transparency Act (CTA) by removing the requirement for U.S. companies and U.S. persons to report BOI. Within the interim final rule, FinCEN revises the definition of “reporting company” to include only entities formed under the laws of a foreign country and then subsequently registered to do business in the U.S. or a tribal jurisdiction. The interim final rule also states that foreign entities will not be required to report any U.S. persons as beneficial owners, and U.S. persons will not be required to report BOI for any entity for which they are a beneficial owner.

The interim final rule also extends the deadline for foreign reporting companies to file BOI reports. Any entity that becomes a reporting company on or after March 26, 2025, must file a report within 30 calendar days of the earlier of the date on which it receives actual notice that it has been registered to do business or the date on which a secretary of state or similar office first provides public notice (such as through a publicly accessible registry) that the reporting company has been registered to do business. Any entity that became a reporting company before March 26, 2025, must file a report no later than April 25, 2025. Additionally, the announcement states that FinCEN will be accepting comments regarding the interim final rule and intends to issue a final rule this year.

This action is consistent with the March 2 U.S. Department of the Treasury announcement that proposed rulemaking will be issued “that will narrow the scope of the rule to foreign reporting companies only.”

Crowe observation

The latest announcement narrowing BOI reporting should provide comfort to U.S. individuals and U.S. entities that have not yet filed or updated BOI reports. However, comments are being submitted and the rule could be updated before it is finalized. Therefore, uncertainty will continue until the final rule is issued.

Looking ahead

It is still unclear whether litigation regarding the CTA and BOI reporting will end now that the requirements have been significantly narrowed. FinCEN is soliciting public comments, which could result in changes when the BOI reporting rules are finalized. Individuals and entities that are unclear about how they are affected by the interim final rules and whether they could have BOI reporting obligations should consult their legal counsel.