The Corporate Transparency Act: what you need to know in 2025

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.

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.