Article
The Corporate Transparency Act: what you need to know in 2025
May 22, 2025 · Authored by William Grady, Michael Lum, Andrew Whitehair
Congress passed the Corporate Transparency Act (CTA) in 2021 as part of its goal to strengthen its efforts involving money laundering, terrorism financing and other financial crimes. Effective beginning on Jan. 1, 2024, the CTA requires certain legal entities (such as corporations, limited liability companies and limited partnerships) in the U.S. to begin reporting identifying information about the individuals who own or control the entity (i.e., beneficial ownership information [BOI] reporting). Since our last article on this topic, there have been significant changes to the CTA and BOI reporting which have drastically reduced the number of entities and individuals who must comply with its rules.
What happened to the BOI reporting requirements since our last post in early 2024?
For companies in existence prior to Dec. 31, 2023, the initial reporting date was Jan. 1, 2025. However, a district court ruling in early December 2024 preliminarily enjoined the government from enforcing the CTA and related reporting. The Jan. 1, 2025 deadline came and went without resolution of the legal issues surrounding BOI reporting. Following another district court ruling against the CTA as well as subsequent government appeals, the status of BOI reporting remained in limbo throughout the start of 2025.
On Feb. 18, 2025, the last nationwide stay of the CTA was lifted, thus allowing the government to enforce CTA and BOI reporting. Acknowledging the confusion and the fact that the initial deadline had already passed, the government immediately issued an extension of the reporting deadline until Mar. 21, 2025 for most reporting companies. A couple of weeks later, the government announced it was suspending enforcement of the CTA against domestic reporting entities. Finally, on March 26, 2025, the Department of Treasury issued an interim final rule significantly narrowing the scope of entities subject to BOI reporting as well as further extending deadlines.
Who is subject to reporting requirements now?
As originally implemented, the BOI reporting requirements introduced as part of the CTA applied to both domestic and foreign reporting entities. Accordingly, most corporations, limited liability companies (LLCs), limited partnerships, limited liability partnerships and certain business trusts were subject to BOI reporting, although numerous exceptions applied.
The interim final rule drastically curtails the number of entities subject to BOI reporting. It exempts all domestic reporting entities and their owners from BOI reporting. This exemption applies to any corporation, LLC or other entity created by the filing of a document with a secretary of state or any similar office under the law of a state or Indian tribe.
Following the final interim rule, only “foreign reporting entities” are subject to BOI reporting. A foreign reporting entity is defined as “a corporation, limited liability company, or other entity that is formed under the law of a foreign country and that is 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, even this requirement for foreign reporting companies to complete BOI reporting has been limited by the interim final rule. Although foreign reporting entities must complete BOI reporting for any non-U.S. owners, they are exempt “from having to report the BOI of any U.S. persons who are beneficial owners.” Additionally, the numerous exemptions detailed in the original law continue to apply to foreign reporting companies. See our original article for further details.
How and when will reporting occur?
The interim final rule is effective as of March 26, 2025. Foreign reporting companies have been granted an additional 30 days to fulfill their BOI reporting requirements. The timeline for reporting depends on when the entity registered to do business in the U.S.
- For foreign reporting companies who registered to do business in the U.S. before March 26, 2025, their BOI reporting is due April 25, 2025.
- For foreign reporting companies who register to do business in the U.S. on or after March 26, 2025, the initial reporting date is within 30 days of registration.
Subsequently, if any of the information changes after the filing of the initial report, additional reporting is required within 30 days of the occurrence of the event. One example is the addition of new beneficial owners, their identities and ownership. If a foreign reporting company learns of an error in a previously filed report, a new amended report must be filed within 30 days.
Reports are required to be filed with Financial Crimes Enforcement Network (FinCEN), which is part of the United States Treasury. Failure to comply will result in civil and criminal penalties under the CTA.
Please contact an attorney for assistance with determining whether a particular business is a reporting company and any subsequent compliance with the CTA. In the meantime, Baker Tilly will continue to apprise you of developments on the CTA in 2025 and beyond.
Questions? Connect with our team.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.
