In a whirlwind attempt to follow the roller coaster actions in the courts, the U.S. Congress, and FinCEN’s administrative efforts, Snell & Wilmer has worked to keep clients updated with the drama-filled developments of the Corporate Transparency Act of 2020 (the “CTA”).
On March 21, 2025, FinCEN (charged with enforcing the CTA on behalf of the U.S. Treasury Department) issued an “interim final order” (the “Interim Order”) that reduced the CTA’s scope to a fraction of its original intent. Under the CTA and FinCEN’s original rules, every corporation, LLC or other “reporting company” chartered in a U.S. state, was obligated to file a beneficial ownership information report (a “BOIR”) with FinCEN. This requirement also applied to every non-U.S. company that had qualified to transact business in the U.S.
Under the Interim Order, reporting companies organized in the U.S. are no longer required to file BOIRs; however, the obligation to file BOIRs continues to apply to companies organized in foreign countries and that are qualified to transact business in the United States (although even those reports no longer require information as to any beneficial owner who is a U.S. citizen). The soft filing deadline to file an initial BOIR for these foreign entities is April 26, 2025.
Even with the CTA in its current state, some technical reporting issues still remain under the Interim Order, such as the identification of U.S. citizens who are “company applicants” for foreign companies that are required to file BOIRs.1 There is also the continuing requirement for any U.S. citizen who applied for and received a FinCEN ID to keep their underlying information current; however, that requirement could change between now and the issuance of the anticipated final rule. Also, for any BOIR already filed with FiNCEN, it is not clear what will happen with the filed information because there is no mechanism by which a filer may delete, retrieve, or “unfile” previously filed information.
FinCEN is accepting comments on the Interim Order. Comments must be received within 60 days after publication of the Interim Order. We anticipate that FinCEN will issue a final rule sometime this year.
Even for U.S. companies, the CTA is not dead. The CTA statute remains as active law and, on the books at least, allows for penalties for noncompliance (including a daily penalty, now adjusted for inflation to $606 a day). The current administration – who opposed the CTA back in 2020 through the veto of President Trump – is not expected to enforce the penalties under the statutory CTA; however, a future administration could choose to reengage with the CTA and enforce penalties. Other questions also remain as to the legal integrity of the Interim Order itself, including the extent by which the Executive Branch may, through certain actions, essentially “gut” an act of Congress. (If the Interim Order is made final, the CTA’s scope will have been eliminated in its original application almost entirely.)
In the meantime, and as how things stand now under the Interim Order, U.S. companies that have already filed are not required to update or correct a previously filed BOIR, and companies organized in the U.S. and U.S. citizens are currently relieved of the obligation to file a BOIR with FinCEN.
Footnotes
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Foreign companies qualified to transact business after January 1, 2024.
