By Leo Parmegiani, CPA, Partner, Chris Migliaccio, JD, Partner and Thomas Kinder, JD, Director
At PKF O’Connor Davies, we have been closely following the see-saw of changes and updates to the continuing saga of which businesses must report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). There have been numerous updates and court decisions as to when the reports were due, if the laws were constitutional, and potential penalties associated with non-filing. Our firm, like many CPA firms, is not providing these services. We believe it is our obligation, however, to make our clients aware of the requirements and the ever-changing legislative and judicial landscape.
Background
The CTA was signed into law in 2021, aimed at increasing transparency and preventing financial crimes (i.e., money laundering and tax evasion). The law initially became effective in 2024 and required a wide range of companies, both foreign and domestic, to disclose information about their beneficial owners (i.e., who ultimately owns or controls the company) by the end of 2024. A court case about the constitutionality of the law led to an injunction on enforcement in December of 2024.
What followed was a series of reversals as the case made its way through the courts, creating confusion about whether the law was in effect and when entities would be required to comply. On March 2, 2025, the Treasury Department announced, with respect to the CTA, it will not enforce any penalties or fines associated with the beneficial ownership information reporting rules under the existing regulatory deadlines for U.S. citizens/businesses, promising a forthcoming clarifying rule.
Below is the most recent update as announced by FinCEN.
Interim Final Rule on BOI
On March 21, 2025, FinCEN announced that it is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons from reporting BOI to FinCEN under the CTA.
In that interim final rule, FinCEN revises the regulatory definition of “reporting company” to mean only those entities that are formed under the law of a foreign country and that have 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 (formerly known as “foreign reporting companies”). FinCEN exempts entities previously known as “domestic reporting companies” from BOI reporting requirements. Thus, through this interim final rule, all entities created in the U.S. — including those previously known as “domestic reporting companies” — and their beneficial owners will be exempt from the requirement to report BOI to FinCEN.
Foreign entities that meet the new definition of a “reporting company” and do not qualify for an exemption from the reporting requirements must report their BOI to FinCEN under new deadlines. 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.
Upon the publication of the interim final rule, the following deadlines apply for foreign entities that are reporting companies:
- Reporting companies registered to do business in the U.S. 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 U.S. 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 that their registration is effective.
Key Takeaway: Relief for Domestic Entities, Urgency for Foreign Filers
In accord with its prior notices and the Department of the Treasury’s March 21, 2025 announcement, FinCEN is applying all exemptions and deadline extensions in the interim final rule as of March 21, 2025, in advance of formal publication in the Federal Register. Further, FinCEN will not enforce any beneficial ownership reporting penalties or fines against U.S. citizens, domestic reporting companies or their beneficial owners.
PKF O’Connor Davies Observation: It’s clear that the new rule provides relief from filing requirements for a wide range of domestic entities. Foreign entities, however, now have a short period of time to review whether they are a foreign reporting company and make the appropriate filing timely.
Contact Us
PKF O’Connor Davies continues to monitor developments in BOI reporting as the pendulum swings and report in timely fashion. For assistance in determining your filing requirements, please consult your legal counsel. If you have questions regarding this update, contact your client service team or:
Leo Parmegiani, CPA, MST
Partner
lparmegiani@pkfod.com
Christopher Migliaccio, JD
Partner
cmigliaccio@pkfod.com
Thomas Kinder, JD, LLM
Director
tkinder@pkfod.com