News and Events
FinCEN Issues Interim Final Rule Eliminating Corporate Transparency Act Reporting for Domestic Entities
The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule (IFR) on March 21, 2025, effectively eliminating beneficial ownership reporting requirements under the Corporate Transparency Act (CTA) for all domestic entities and U.S. persons. The IFR represents a dramatic shift in the scope of the CTA's application and reverses more than three years of rulemaking and compliance planning following the CTA's enactment in January 2021.
Practical Takeaway: For the vast majority of U.S. businesses, the CTA's reporting requirements are no longer applicable. Entities with potential foreign registration exposure should reassess obligations in light of the revised rule.
Key Impacts: Domestic Entities Exempted: The IFR removes domestic reporting companies from the definition of “reporting company,” effectively eliminating CTA compliance obligations for more than 99.9% of previously covered entities.
U.S. Persons Exempted: U.S. persons who are beneficial owners of foreign entities are no longer required to be reported, nor are reporting companies required to collect their information.
Foreign Reporting Requirement Narrowed: Only foreign entities registered to do business in a U.S. state or tribal jurisdiction must report beneficial ownership information—excluding U.S. beneficial owners. FinCEN estimates fewer than 20,000 such entities are affected, down from the more than 32 million entities originally anticipated to be subject to reporting.
Effective Date and Compliance Timeline: The IFR will become effective upon publication in the Federal Register, expected shortly. Reporting deadlines for impacted foreign entities are extended to 30 days following publication.
Next Steps: FinCEN will accept public comments and anticipates issuing a final rule later in 2025. In the interim, entities previously subject to the CTA may reasonably rely on the IFR to suspend reporting preparations.
