United States: FinCEN issues Interim Final CTA Regulations limiting BOI reporting rule to foreign companies

Tax News and Developments March 2024
26 Mar 2025    3 minute read

In brief

On March 21, 2025, FinCEN issued Interim Final Regulations (IFRs) that narrow the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). Under the IFRs, only entities previously defined as "foreign reporting companies" are required to comply with the BOI reporting requirements of the CTA. In addition, "US persons" are now exempt from being reported as beneficial owners of foreign reporting companies and from having to provide their beneficial owner information regarding such companies. The IFRs also extend the BOI report filing deadline to April 25, 2025, for foreign reporting companies registered to do business in the US before March 26, 2025. The Interim Final Regulations are subject to a sixty day comment period, and later this year FinCEN will issue Final Regulations.

Contents

In depth

The IFRs issued on March 21, 2025, formalize announcements by FinCEN and the Treasury Department earlier this year regarding CTA BOI exemptions. The IFRs also provide further limits on the application of the CTA. 

The IFRs carry out the new CTA BOI exemptions and limitations by amending the existing CTA regulations issued in 2022 in a few key ways. First, the IFRs now define a "reporting company" as a corporation, limited liability company, or other entity formed under the law of a foreign country that has registered to do business in any US state by the filing of a document with a secretary of state. Therefore, only foreign formed entities that have registered to do business in the US are now required to file BOI reports. 

Second, the IFRs specifically exempt a "domestic entity" from being a reporting company, making such entities exempt from the BOI reporting requirements. A domestic entity is defined by the IFRs as a corporation, limited liability company, or other entity created by the filing of a document with a secretary of state of a US state. 

There may be a question as to whether a foreign formed partnership is an "entity" under the CTA, and whether it would have to file a BOI report if it registers to do business in the US. However, partnerships for US tax purposes are referred to as "entities" throughout the preamble to the CTA regulations issued in 2022. Consequently, a foreign partnership that registers to do business in the US is likely required to file a BOI report for its non-US person owners under the IFRs. Of course, limited partnerships formed under the law of a US state are now exempt from BOI reporting.

Third, the IFRs provide that reporting companies are exempt from reporting the beneficial ownership information of any "US persons" who are beneficial owners of the company. In addition, "US persons" are exempt from providing beneficial ownership information regarding any reporting company for which they are a beneficial owner. Therefore, reporting companies that only have beneficial owners who are US persons are exempt from the requirement to report any beneficial owners. This is clearly stated in the preamble to the IFRs.

With the new exemption of "US persons" from BOI reporting, it is important to understand how this term is defined. The CTA defines the term "US person" as a US citizen, a non-US citizen who is a lawful permanent resident of the US at any time during a calendar year (i.e., a so-called "green card" holder), and a non-US citizen who meets the so-called "substantial presence test" for a particular year for US income tax purposes (discussion of the substantial presence test is beyond the scope of this alert).

In conclusion, entities that are reporting companies under the IFRs (i.e., non-US entities registered to do business with a US state) that have beneficial owners who are not US persons are now the only companies that must comply with the BOI reporting requirements. Reporting companies registered to do business in the US with a secretary of state before March 26, 2025, are required to file BOI reports no later than April 25, 2025. Reporting companies registered on or after March 26, 2025, have 30 calendar days to file an initial BOI report after receiving notice from the secretary of state that their registration is effective.

Contact Information
Glenn G. Fox
Partner
New York
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glenn.fox@bakermckenzie.com
Terence Gilroy
Partner
New York
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terence.gilroy@bakermckenzie.com

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