An interim final rule issued by the Financial Crimes Enforcement Network on March 21 eliminates beneficial ownership information reporting requirements under the Corporate Transparency Act for all entities formed in the U.S., marking the end of an on-again, off-again saga for millions of small businesses that began in late 2024.
In addition, the interim final rule says that U.S.-based individuals are no longer required to report BOI, even if they’re beneficial owners of foreign companies doing business in the U.S.
- Related article: Reactions Mixed on Treasury Halting Enforcement of BOI Reporting Requirements
- Related article: Treasury Department Suspends Enforcement of BOI and Corporate Transparency Act
- Related article: FinCEN Extends BOI Reporting Deadline … Again, Pauses Enforcement
- Related article: FinCEN: New BOI Reporting Deadline is March 21
- Related article: BOI Reporting Still Voluntary Despite Supreme Court Decision
- Related article: Beneficial Ownership Information Reporting Enforcement on Hold Yet Again After Appeals Court Reinstates Injunction
As expected, based on a March 2 announcement by the Treasury Department, the interim rule from FinCEN narrows the scope of BOI reporting requirements to foreign reporting companies only.
According to FinCEN, foreign companies that still have to comply with U.S. BOI reporting rules:
- Were formed under the laws of a foreign country, and
- Have registered to do business in the U.S. by filing with a secretary of state or similar office.
However, those non-exempt foreign companies don’t have to report any U.S. beneficial owners.
The new BOI filing deadlines for foreign companies are:
- If registered before March 21, 2025, BOI reports are due by April 20, 2025.
- If registered on or after March 21, 2025, BOI reports must file within 30 calendar days of effective registration.
The Treasury Department said March 2 that it would no longer enforce the Corporate Transparency Act or the associated BOI reporting requirements, pending the interim final rule that would be issued by FinCEN, which Treasury oversees. Following that announcement, President Donald Trump called the BOI reporting requirements “outrageous and invasive” for U.S. small businesses.
“NFIB has been steadfast since the beginning that this onerous requirement is a massive intrusion into small businesses’ privacy and creates an unprecedented new government database on Americans. We agree with President Trump that requirements from the Corporate Transparency Act are ‘outrageous and invasive,’” National Federation of Independent Business President Brad Close said in a statement on March 22. “NFIB will continue to work with Congress to put the administration’s actions into law and repeal the CTA fully. Furthermore, Congress should direct FinCEN to immediately destroy all of the data that was already submitted by small businesses out of fear they would face fines and prison time.”
The Corporate Transparency Act, which was signed into law in January 2021, is an anti-money laundering law that directed businesses to report their ownership structures to FinCEN. The thinking was that clear ownership structures make it more difficult for bad actors to use shell companies for illicit activities like money laundering or drug trafficking.
A Jan. 1, 2025, deadline had originally been set for U.S. reporting companies to file their BOI reports with FinCEN, but that deadline was delayed and suspended numerous times by federal courts. Still, many businesses had filed their BOI reports on a voluntary basis.
Organizations that support the Corporate Transparency Act and the BOI reporting requirements stated they’re disappointed with the actions by the current Trump administration, saying the president’s first administration supported the Corporate Transparency Act when it was proposed in 2019.
“Treasury’s proposal contradicts decades of evidence that sanctions evaders, tax cheats, and fentanyl traffickers rely on anonymous U.S. companies to stash their illicit cash in the U.S. financial system,” Ian Gary, executive director of the FACT (Financial Accountability & Corporate Transparency) Coalition, said in a statement. “This decision is tantamount to nullifying the statute and is very unlikely to be upheld in court. Treasury must take these legal and constitutional considerations into account as part of the rulemaking.”
“District attorneys around the country strongly support the Corporate Transparency Act as an indispensable tool for combating the fentanyl epidemic, transnational crime, terrorism financing, and other illicit activities,” said Nelson Bunn, executive director of the National District Attorneys Association. “Access to beneficial ownership information is a necessity for prosecuting crimes. Treasury’s interim final rule threatens to deny law enforcement the vital information they need to pursue illegitimate business fronts that jeopardize U.S. national security and public safety. If finalized without amending, this proposal will undermine Congress’s intent and stunt efforts to achieve justice across the nation.”
Albert Torres, senior program manager of the George W. Bush Institute, added, “The Corporate Transparency Act is one of the most pivotal advancements made by the U.S. government to confronting the exploitation of the U.S. financial system driven by illegitimate and anonymous companies. Foregoing enforcement would hinder tackling some of the most pressing issues today, including fentanyl trafficking, terrorism financing, and foreign corruption. The proposed rule made by Treasury would hinder the efforts of law enforcement and the administration in addressing these issues of utmost importance and should be considered during the rulemaking process.”
FinCEN will accept public comments and intends to issue a final rule later this year, but significant changes to this policy aren’t expected.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
