3/21/25 update
On March 21, FinCEN announced it’s issuing an interim final rule eliminating the beneficial ownership information (BOI) reporting requirement for U.S. persons and U.S. companies. The interim final rule says:
- All entities created in the United States and their beneficial owners are exempt from BOI reporting; and
- BOI reporting is only required for entities formed under the law of a foreign country and 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 (reporting company).
A foreign entity that meets the definition of a reporting company under (2) above and does not qualify for an exemption from the reporting requirements must report its BOI to FinCEN under new deadlines. Upon publication of the interim final rule in the Federal Register (which was March 26) the following deadlines apply to foreign entities that are reporting companies:
- Reporting companies registered to do business in the United States before the date of publication of the interim final rule must file BOI reports no later than 30 days from that date.
- Reporting companies registered to do business in the United States on or after the date of publication of the interim final rule have 30 calendar days to file an initial BOI report after receiving notice their registration is effective.
For avoidance of doubt, these 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 with respect to any such entity for which they are a beneficial owner.
FinCEN is applying all exemptions and deadline extensions in the interim final rule as of March 21, in advance of formal publication in the Federal Register, and will not enforce any beneficial ownership reporting penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.
The U.S. Treasury announced on March 2 that “not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.”
The Treasury Department also indicated it will be issuing proposed rulemaking to “narrow the scope of the rule to foreign reporting companies only.”
We will keep you posted on details of the forthcoming interim final rule when it is released.
FinCEN announced on February 27 it will not pursue any fines, penalties, or enforcement actions against companies that fail to file or update their BOI reports until after the effective date of a forthcoming interim final rule.
The interim final rule, which FinCEN intends to issue before the current March 21 filing deadline, will extend BOI reporting deadlines in an effort to reduce regulatory burdens and prioritize reporting for entities considered to be significant law enforcement and national security risks.
We will update you on the details of any revised BOI filing deadlines soon after FinCEN releases this interim final rule.
On February 17, a federal district court judge presiding over Smith v. U.S. Dept. of the Treasury reversed their previous decision to suspend nationwide BOI reporting, pending the case’s appeal to the U.S. Court of Appeals for the Fifth Circuit. The reversal was in response to a recent U.S. Supreme Court decision in the McHenry case that permitted nationwide BOI enforcement while the case works its way through appeals.
In response to this decision, FinCEN updated its website with the following BOI deadlines:
“For the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided. Reporting companies that were previously given a reporting deadline later than the March 21, 2025, deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.”
For additional information on FinCEN’s revised BOI reporting deadlines, please see Alert: Ongoing Litigation — Smith, et al.
Separately, on February 10, the U.S. House of Representatives unanimously passed the Protect Small Businesses from Excessive Paperwork Act of 2025, which would delay the above-mentioned BOI reporting deadline to January 1, 2026. The bill now sits with the Senate Committee on Banking, Housing, and Urban Affairs. Despite the fact that Committee Chairman Tim Scott (R-SC) supports the House bill, the Senate has not yet scheduled a date on which to vote on this legislation.
To be clear, if the bill passes the Senate and is signed into law by President Trump, it will override the deadlines discussed on FinCEN’s website and the new filing deadline would be January 1, 2026. However, without these actions, the proposed extended deadline of January 1, 2026, is not in effect at this time.
On Thursday, January 23, the U.S. Supreme Court lifted the nationwide BOI reporting ban previously issued by the United States Court of Appeals for the Fifth Circuit on December 26, 2024. Later in the day, in a separate case, the U.S. District Court for the Eastern District of Texas (Tyler Division) issued an order suspending BOI reporting on a nationwide basis pending litigation. In response, FinCEN has indicated that BOI reporting remains voluntary, and reporting companies will not be subject to liability while this new order remains in effect. We will keep you posted on new developments.
On December 26, the United States Court of Appeals for the Fifth Circuit reversed course and reinstated a nationwide ban on BOI reporting, pending further review of the constitutional challenge brought by the plaintiffs in Texas Top Cop Shop v. Garland. The next day, FinCEN issued a statement indicating that, in light of this case, “reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. ”As of now, BOI reporting is strictly voluntary until further notice. CLA will continue to monitor this situation and provide you with updates as they become available.
On December 26, the United States Court of Appeals for the Fifth Circuit reversed course and reinstated a nationwide ban on BOI reporting, pending further review of the constitutional challenge brought by the plaintiffs in Texas Top Cop Shop v. Garland. FinCEN has not yet released its response to this latest ruling.
On Monday, December 23, the United States Court of Appeals for the Fifth Circuit granted the U.S. government’s motion to reinstate nationwide beneficial ownership information reporting (BOI), after the U.S. District Court for the Eastern District of Texas issued a nationwide suspension of such reporting earlier this month.
In response, FinCEN has extended the BOI reporting deadlines as follows:
- Reporting companies created or registered prior to January 1, 2024, have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
- Reporting companies created or registered in the United States on or after September 4, 2024, with a filing deadline between December 3, 2024, and December 23, 2024, have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies created or registered in the United States on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
- Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
- Reporting companies created or registered in the United States on or after January 1, 2025, have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
- As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) — namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024) — are not currently required to report their beneficial ownership information to FinCEN at this time.
We recommend clients reach out to their attorney to discuss how to proceed with BOI reporting. CLA does not advise on or assist with BOI reporting preparation.
Key insights
- The Corporate Transparency Tax Act is designed to help the U.S. government collect information to prevent use of the U.S. financial system for illicit activities.
- All domestic entities and any foreign entity registered to do business in the United States must report beneficial ownership information.
- The reporting is complex and there are penalties for noncompliance.
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Many businesses must soon report new beneficial ownership information (BOI) to the U.S. government. We’re sharing important updates and five fast facts to help you clarify your responsibilities.
Background
In 2021, Congress enacted the Corporate Transparency Tax Act (CTA), which establishes uniform BOI reporting requirements for certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States.
The CTA is designed to help the U.S. government collect information necessary to prevent bad actors from using the U.S. financial system to facilitate money laundering, tax evasion, human and drug trafficking, and other illicit activities.
The CTA authorizes the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury, to collect and disclose BOI information to authorized government authorities and financial institutions. Since CTA’s enactment, FinCEN has issued implementing regulations — the basics of which are discussed briefly below.
CLA will not advise on or assist with BOI reporting preparation. We recommend that you reach out to your attorney for assistance in complying with these filings.5 fast BOI reporting FAQs
1. What companies will be required to report BOI to FinCEN?
All domestic entities and any foreign entity registered to do business in the United States. Entities subject to BOI reporting include a corporation, limited liability company, or any other entity created by the filing of a document with the secretary of state or similar office in the United States.
2. Are there exemptions from BOI reporting?
Yes, FinCEN notes 23 BOI reporting exemptions.
Perhaps the most common exception to BOI reporting is the large operating company exemption. Generally, a company meets this exemption if it has at least 20 full-time employees, more than $5 million in gross receipts or sales, and an operating presence at a physical office within the United States. For purposes of the $5 million threshold, the threshold is measured as gross receipts or sales net of allowances on Forms 1120, 1120-S, 1065, or other equivalent tax return. It should be noted, however, that the 20-employee threshold is not applied on a consolidated basis. As a result, a parent company filer of a consolidated C corporation tax return must itself have 20 or more full-time employees to meet the large operating company exception.
Other exemptions apply to Section 501(c)(3) tax-exempt entities and certain types of regulated financial companies.
3. When does BOI reporting start?
The beneficial ownership information reporting deadlines initially released are noted below. For the latest changes and reporting deadlines, see the updated information at the top of the article.- Reporting companies created or registered to do business before January 1, 2024, must file initial BOI reports with FinCEN on or before January 1, 2025.
- Reporting companies created or registered to do business on or after January 1, 2024 and before January 1, 2025, will have 90 days from creation or registration to file their initial BOI reports.
- Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports with FinCEN.
- Any changes to previously reported BOI must be reported to FinCEN within 30 days.
4. What information does a reporting company disclose to FinCEN?
A reporting company must report:
- Legal name
- Any trade, doing business as, or trading as names
- The current street address of its U.S. place of business, jurisdiction of formation or registration
- IRS taxpayer identification number
- Type of BOI filing (i.e., initial report, a correction of a prior report, or an update to a prior report)
In addition, for each individual who is a beneficial owner or company applicant, the reporting company must report:
- Individual’s name
- Date of birth
- Address
- Unique identifying number from an acceptable identification document (e.g., driver’s license, passport, etc.)
- Name of the state or jurisdiction that issued the identification document
A beneficial owner is an individual who either directly or indirectly (1) exercises substantial control over the reporting company (e.g., a senior officer or key decision-maker), or (2) owns or controls at least 25% of the reporting company’s ownership interests. A corporate entity owner is “looked through” to its ultimate owners for purposes of determining the 25% ownership test.
Although not required, many filers are encouraged to obtain FinCEN identifiers to help facilitate filing this information.
There is no fee to file BOI reports with FinCEN.
5. Are there penalties for failing to file BOI reports with FinCEN?
Yes, be aware of BOI filing penalties. A person who willfully fails to comply with BOI reporting may be subject to civil penalties of $500 per day (adjusted for inflation it is now $591 per day) and criminal penalties including a $10,000 fine and/or up to two years of imprisonment.