The Corporate Transparency Act (the “CTA”) was enacted to prevent bad actors from taking advantage of the U.S. financial system. The CTA required “domestic reporting entities” and “foreign reporting entities” to provide Financial Crimes Enforcement Network (FinCEN) (a division of the U. S. Treasury Department) with a report (a “BOI Report”) containing personal information – including a copy of a personal identification item (such as a passport or driver’s license) and a legible picture of persons who are “senior officers” or “beneficial owners” (each, a “Beneficial Owner” under the CTA) and information about individuals who directly files the document that first registers the Reporting Company (a “Company Applicant”). If a person does not want to share his or her personal information with a reporting company, the CTA permits FinCEN to issue FinCEN Identifier Numbers whereby the person submits the required information directly to FinCEN and the reporting company then only reports the person’s FinCEN Identifier Number.
The requirements for filing did not begin until January 1, 2024 for entities created under U. S. law or entities created under the laws of a foreign jurisdiction that register to do business in the United States after January 1, 2024. The filing is done electronically either directly through FinCEN or through one of many third party service companies that will provide the filing information to FinCEN on behalf of a reporting company.
The implementation of the CTA was challenged in numerous lawsuits as the operation of the CTA filing required millions of small businesses in the United States to collect information and make the filing. The ultimate impact of the challenges to the CTA and the change of administrations resulted in FinCEN issuing an interim final rule that defines a “reporting company” under the CTA as entities that are formed under the laws of a foreign country that have registered to do business in any U. S. State or Tribal Jurisdiction by filing a document with a secretary of state or similar office. The BOI Report does not have to include information about any United States person who may be a Beneficial Owner but would need to include such information for any United States person who is a Company Applicant.
The interim final rule was published on March 26, 2025. The deadlines for “reporting companies” to make a BOI Report are now:
- Reporting companies registered to do business in the United States before March 26, 2025 must file initial BOI Report by April 26, 2025.
- Reporting companies registered to do business after March 26, 2025 have 30 calendar days to file an initial BOI Report after receiving notice that their registration is effective.
- If circumstances change, the CTA requires that updates to the BOI Report (essentially refiling the BOI Report with any changes) be filed within 30 days of the relevant changes. This could be as a result in the change of address, death, transfer of ownership, or change in the senior officers of the reporting company.
- Persons who have obtained FinCEN Identifiers are still required to update their information within 30 days of the change.
Foreign entities that operate in the United States through subsidiaries organized under the laws of any U. S. state, territory or tribal jurisdiction are not required to file a BOI report or to update a previously filed BOI Report. Prior to the publication of the Interim Final Rule, U. S. subsidiaries of foreign entities would have to qualify for an exemption from filing either by being subject to certain types of regulation or by satisfying both a revenue and employee requirement. Holding companies without employees would not have qualified for an exemption and may have made an initial BOI Report.
PLG can assist reporting companies in identifying the persons for which information must be provided in the BOI Report. The interim final rule may be modified and future litigation may challenge the authority of FinCEN to modify the definition of a reporting company to eliminate all reporting for domestic entities.
All filings are to be made electronically so that the information provided will be collected and stored in an electronic media. The reporting companies should institute security measures to protect this information from misuse.
To obtain more information and advice, please contact Edward Wender or Daniel Sheridan.
