Corporate Transparency Act- What You Need to Know
CTA Removes BOIR filing requirement for all U.S Companies
Consistent with the U.S. Department of the Treasury’s March 2, 2025, announcement, the Financial Crimes Enforcement Network (FinCEN) is issuing an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.
In that interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations 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 also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.
Thus, through this interim final rule, all entities created in the United States — 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 Beneficial Ownership Information (BOI) to FinCEN under the new deadlines detailed below. These foreign entities, however, 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 United States before the publication date of the IFR must file BOI reports no later than 30 days after that date.
- Reporting companies registered to do business in the United States on or after the date of publication of the IFR have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective.
FinCEN is accepting comments on this interim final rule and intends to finalize the rule this year.
Foreign reporting companies will need to file a Beneficial Ownership Information Report (BOIR) with the U.S. Department of the Treasury, Financial Crimes Enforcement Network (FinCEN). This BOIR must identify the beneficial owners and anyone with “substantial control” of the reporting company. They must also identify two of the “company applicants” involved in the process of forming the entity within 30 days from the date of receiving actual or public notice of their creation or registration becoming effective to file their annual reports.
Reporting Companies have 30 days to report any changes to the information in their previously filed FinCEN reports. They must correct inaccurate information in previously filed reports within 30 days of when the reporting company becomes aware or has reason to know of the inaccuracy of information in earlier reports.
Key Facts and Definitions
- A domestic reporting company is a corporation, limited liability company (LLC), or any entity created by filing a document with the Secretary of State or a similar office under the laws of a state or Indian tribe.
- Domestic reporting companies are now exempt from filing under the interim final rule issued on March 21, 2025.
- A foreign reporting company is a corporation, LLC, or other entity formed under the laws of a foreign country that is registered to do business in any state or tribal jurisdiction by filing a document with the Secretary of State or a similar office.
- Now called “reporting companies” under the March 21, 2025, interim final rule.
- There are 23 entity types exempt from the definition of “reporting company,” including:
- Publicly held issuers that file reports with the Securities and Exchange Commission, as well as broker-dealers, exchanges, clearing agencies, and investment companies registered or licensed under the federal securities laws.
- Certain banks, credit unions, and other licensed financial
- Tax-exempt
- Large operating companies that employ 20 or more full-time employees in the US have a physical presence in the US and have filed tax returns in the US reflecting gross receipts or sales of more than $5,000,000.
- Inactive entities. An inactive entity that existed on or before January 1, 2020, is not engaged in active business and is not owned, directly or indirectly, wholly or partially, by a foreign person. In addition, the inactive company:
- Has not experienced any change in ownership in the preceding 12-month period,
- Has not sent or received any funds in an amount greater than $1,000, either directly or through any financial account in which the entity or any affiliate of the entity had an interest, in the preceding 12-month period; and
- Does not otherwise hold any kind or type of assets, whether in the U.S. or abroad, including any ownership interest in any corporation, LLC, or other similar entity.
- Other types of entities, including certain trusts, GPs, and decentralized autonomous organizations (DAOs), are excluded from the definitions to the extent that they are not created or registered by filing a document with the Secretary of State or similar
- A Beneficial Owner is any individual who, directly or indirectly, either (1) exercises substantial control over a reporting company or (2) owns or controls at least 25 percent of the ownership interest of a reporting Substantial control includes a senior officer and any other person who directs, determines, or has substantial influence over important decisions made by the reporting company, whether the control is direct or indirect.
- Ownership interest includes any instrument that is convertible, with or without consideration, including convertible securities, options, warrants, and other similar instruments.
- Beneficial Owner exemptions. There are five types of individuals who are exempt from the definition of Beneficial Owner:
- A minor child,
- An individual acting as a nominee, intermediary, custodian, or other agent on behalf of another individual,
- An employee of a reporting company acting solely as an employee and who is not a senior officer,
- An individual whose only interest in the reporting company is a future interest through right of inheritance and a creditor of a reporting company
- Only two Company Applicant persons in the filing chain must be reported. The company applicant is either:
- The individual who directly files the document that first registered the entity to do business in the U.S.
- The individual primarily responsible for directing or controlling the filing of the relevant document by another.
- In both cases, be sure to use the individuals’ business address and not their home address.
- Reporting companies registered after January 1, 2024, are required to report company applicants, whereas reporting companies existing before January 1, 2024, will not need to report.
Corp1 staff will supply our Company Applicant FinCEN Identifier numbers upon request so reporting companies have the necessary information needed to file their reports.
Beneficial Ownership Information Reports (BOI Reports)
When filing BOI Reports with FinCEN, the reporting company must identify itself and report four pieces of information about each of its beneficial owners AND for 2 of the Company Applicants. Reporting companies created after January 1, 2024, must provide the four pieces of information and document image for company applicants as well:
- Name,
- Birthdate,
- Business Address, and
- A unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document), i.e., driver’s license or passport
Individuals may obtain a “FinCEN Identifier,” which can be provided to FinCEN on a BOI report in lieu of the required information about the individual.
What is Substantial Control?
It’s not just ownership… it is also individuals with substantial control over the Reporting Company and includes people in positions of authority*
- Ownership interest = 25% or greater ownership interest in the Reporting Company
- Senior officer
- Authority to appoint or remove certain officers or a majority of directors
- Decision maker
- Excludes ministerial roles (such as Secretary or Treasurer)
- Excludes ordinary day-to-day managerial decisions
- Excludes 3rd party professional services
*Note that when a minor child who has 25% or more ownership in a Reporting Company comes of age, this will trigger a requirement to file an updated BOI Report.*
Penalties for Failure to File a Report
Penalties for failure: $500 per day, in the case of willful violation, up to 2 years in prison
Corp1’s Solution: https://www.singlefile.io/corp1
With Corp1’s Delaware Annual Report and Corporate Transparency Act (CTA) Premium Filing and Monitoring Service powered by SingleFile, managing DE Annual Reports and/or the new CTA mandates is a breeze. This technology-powered platform helps thousands of organizations and advisors schedule, pay, and file on time, reducing time, errors, and missed deadlines.
Create the account and receive the invitation to add all required ownership and management data required for the BOIR. Attest to the validity of the information provided and submit the report to FinCEN.
Need help? Contact us at info@corp1.com or call 302.736.3466 or toll-free 855.736.3466.