Closing Call for the Corporate Transparency Act: FinCEN Removes Reporting Requirements for Domestic Business Entities

March 27, 2025
Publications

by Timothy Finnerty, Tre Blomeier, Gelare h Etesam and Frank Lavery, III

After almost fifteen months of legal challenges, conflicting court rulings, changing guidance from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), and a general air of uncertainty, it appears that corporations, limited liabilities, and other business entities formed within the United States now have some final guidance on which they can rely to determine the need to comply with the Corporate Transparency Act (CTA) (31 U.S.C. § 5336).

Background on the Corporate Transparency Act

Originally passed as part of the 2021 National Defense Authorization Act, the CTA went into effect on January 1, 2024, with most reporting companies required to comply with its beneficial ownership information (BOI) reporting requirement by January 1, 2025. The CTA was a sweeping piece of legislation that would have affected millions of business entities in the U.S. Toward the end of 2024, various court decisions began to cast doubt on the constitutionality of the CTA’s reporting rule. You can read more about the procedural posture of the CTA’s various legal battles here.

FinCEN’s self-imposed moratorium and final rule

Then, on March 2, 2025, FinCEN instituted a self-imposed moratorium on enforcement of the CTA’s reporting requirements pending further guidance, which it indicated it would publish by March 21. True to its word, on Friday, March 21, 2025, FinCEN issued an interim final rule that removed the reporting requirements for domestic business entities — that is, business entities formed within the U.S.

Revised definition of “Reporting Company”

FinCEN revised the definition of “reporting company,” which, subject to a few notable exceptions, was originally defined as a corporation, limited liability company, or other similar entity that was either (a) formed as a domestic business entity by filing a document with a Secretary of State or similar office under the laws of a state or Indian Tribe, or (b) formed as a foreign business entity and registered to do business in the U.S. With its interim final rule, the full text of which you can read here, FinCEN has effectively removed the first part of the definition (subpart (a) above), and the meaning of “reporting company” now refers only to foreign business entities that register to do business in the U.S., while exempting all domestic business entities — whether they would have originally qualified as reporting companies or not — from the CTA’s BOI reporting requirements.

Implications for foreign reporting companies

Foreign reporting companies will still be required to comply with the CTA; however, the reporting parameters have also changed for them. For example, even foreign reporting companies will not be required to report any U.S. persons as beneficial owners. U.S. persons will not have to file BOI reports even if they are beneficial owners of a foreign reporting company. For the most tailored advice, foreign companies should consult with their U.S. legal advisors to understand the new filing obligations under the CTA.

State reporting requirements remain

While domestic entities have seemingly evaded burdensome compliance obligations imposed under the CTA, other state reporting requirements persist. For example, Pennsylvania-registered organizations and foreign entities qualified to do business in the Commonwealth must still comply with newly imposed Annual Reports under Act 122. You can read our comprehensive summary of Act 122 Annual Reports here. As other states continue to adopt robust reporting obstacles, businesses should consult with their legal teams to ensure compliance with all applicable state and federal laws.

Conclusion

For now, it appears that the saga surrounding the CTA, at least for domestic entities, has come to a conclusion. After over a year of navigating the ever-changing landscape of CTA compliance, the behemoth shadow of the CTA, together with its strict — and, as some might say, draconian — penalties for non-compliance, has gone out with more of a whimper than a bang. McNees will continue to monitor developments and provide updates concerning the CTA as they arise. However, as always, you should consult with your legal counsel if you have any specific questions.

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