U.S. companies are officially off the hook from filing a beneficial ownership information report, but the Financial Crimes Enforcement Network’s (FinCEN) recent decision could face legal challenges.
On Friday, March 21, FinCEN submitted an interim final rule that modifies the Corporate Transparency Act. That includes exempting all U.S. companies and persons from beneficial ownership information reporting requirements while keeping the rules intact for foreign companies.
Small-business owners have been left dazed and confused after a series of court decisions have taken them off the hook from filing a beneficial ownership information report, only to be put back on the hook soon after. In February, the last remaining injunction pausing the Corporate Transparency Act was lifted, putting BOI reporting back in place. At the time, FinCEN said companies had until March 21 to file.
On March 2, FinCEN announced that it will not be enforcing beneficial ownership information rules, unofficially taking small-business owners off the hook. The agency said it planned to issue rule changes before the March 21 deadline.
In the interim final rule, FinCEN narrows existing beneficial ownership information rules to require only foreign companies to submit a report. Affected companies include those that were “formed under the law of a foreign country and that (are) registered to do business in the United States by the filing of a document with a secretary of state or equivalent office under the law of a state or Indian tribe.”
However, foreign companies owned by U.S. citizens are exempt. The interim final rule also exempts foreign companies from having to report beneficial ownership information of any U.S. persons who are beneficial owners of the company. If all beneficial owners are U.S. persons, then the foreign company does not have to file a report.
Essentially, only foreign companies are required to file a beneficial ownership information report, and only for foreign owners. All U.S. persons and companies are off the hook.
The deadline for foreign companies to file a report will be 30 days from when the interim final rule is published. There will be a 60-day comment period for the rule. As of Monday, March 24, the interim final rule had not been published in the Federal Register. The docket number for the rule is FINCEN-2025-0001.
The Corporate Transparency Act allows the Treasury Department to exempt entities if beneficial ownership information reporting “would not serve the public interest” and “would not be highly useful in national security, intelligence, and law enforcement agency efforts to detect, prevent, or prosecute money laundering, the financing of terrorism, proliferation finance, serious tax fraud, or other crimes.” FinCEN said in the interim final rule that “the vast majority of domestic small businesses are legitimate and owned by hard-working American taxpayers who are not engaged in illicit activity.”
FinCEN estimates that labor costs for initial beneficial ownership information reporting in the first year to be nearly $22 billion and $3 billion annually in subsequent years. Costs for BOI updates will add another $2 billion each year.
Future of BOI still murky
FinCEN’s interim final rule may not be “final.”
In a Bloomberg Law op-ed, attorneys at the corporate law firm Stinson suggest that FinCEN’s interim final rule is ripe for legal challenges. Although the Corporate Transparency Act allows for additional exemptions to limit the burden on companies required to submit a beneficial ownership information report, the attorneys argue FinCEN’s sweeping exemption to all U.S. companies goes against the intent of Congress.
A week after FinCEN announced its plan to exempt all U.S. companies, Sens. Charles Grassley, R-Iowa, and Sheldon Whitehouse, D-R.I., asked Treasury Secretary Scott Bessent to provide the legal basis for the department’s decision. The senators expressed concerns about severely gutting the Corporate Transparency Act.
“This is a matter of public and congressional accountability and ensuring that relevant policy interests underlying the (Corporate Transparency Act) are satisfied,” the senators wrote in the letter. “We encourage you to fully implement the (Corporate Transparency Act) so that law enforcement agencies around the country have access to information necessary to prevent human trafficking, terrorist financing, border smuggling, drug distribution, and many other categories of criminal activity.”
If a court strikes down FinCEN’s final rule, small-business owners may be back on the hook to file a beneficial ownership information report yet again. A more bulletproof exemption would require an act of Congress.
There are currently two bills in Congress addressing beneficial ownership information reporting.
The Repealing Big Brother Overreach Act would eliminate the Corporate Transparency Act and its beneficial ownership information reporting requirement. With 129 Republican co-sponsors for the House version, 26 Republican co-sponsors in the Senate and no Democrat support for either, the bill may struggle to get out the door. It has been sitting in committee since introduced in January.
A bipartisan bill called the Protect Small Business from Excessive Paperwork Act would give small-business owners some relief from the whiplash caused by the legal challenges. The bill simply extends the beneficial ownership information reporting deadline to Jan. 1, 2026. Already approved by the House, the bill is now in the hands of the Senate.
It is not clear how FinCEN’s interim final rule may affect pending lawsuits challenging beneficial ownership information requirements. Oral arguments in the case that first ordered a nationwide injunction were postponed on March 22. LL
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