On Friday, the U.S. government significantly narrowed the scope of beneficial ownership information (BOI) reporting requirements, limiting them exclusively to foreign entities. This move formalizes a change previewed earlier this month by the Treasury Department and marks a notable shift in the implementation of the Corporate Transparency Act (CTA), P.L. 116-283, which was passed by Congress in 2021.
The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule that removes the requirement for U.S. companies and individuals to report beneficial ownership information to FinCEN under the CTA. The rule revises the definition of a “reporting company” to include only those entities formed under the laws of a foreign country that have registered to do business in any U.S. state or tribal jurisdiction by filing a document with a secretary of state or similar office. These entities were previously referred to as “foreign reporting companies.”
Under the new rule, entities previously classified as “domestic reporting companies” are now exempt from BOI reporting requirements. Additionally, foreign reporting companies are no longer required to report the BOI of U.S. persons who are beneficial owners of these entities. U.S. persons are also exempt from providing such information to any foreign reporting company for which they are a beneficial owner.
The rule also introduces a 30-day extension for foreign entities that were registered to do business in the U.S. before Friday. These entities, which had been required to file their BOI reports by Friday, now have an additional 30 days to comply. For foreign entities registering to do business in the U.S. in the future, the rule stipulates a 30-day window to file an initial BOI report after receiving notice that their registration is effective.
AICPA Advocacy and Resources
The American Institute of CPAs (AICPA) and state CPA societies have been actively advocating for changes to the BOI reporting requirements. They have written numerous letters to Congress and FinCEN urging a delay in the BOI reporting deadline, citing concerns about the complexity and burden of compliance for businesses. The AICPA continues to provide updates and resources through its BOI reporting resource center, which offers guidance and information to help businesses navigate the evolving regulatory landscape.
This interim final rule represents a significant adjustment to the CTA’s implementation, reducing reporting obligations for U.S. entities while maintaining requirements for foreign entities operating in the U.S. Stakeholders, including CPAs and businesses, are encouraged to monitor further developments and utilize available resources to ensure compliance with the updated regulations.
References:
1. Financial Crimes Enforcement Network (FinCEN) Interim Final Rule on Beneficial Ownership Reporting.
2. Corporate Transparency Act (CTA), P.L. 116-283.
3. AICPA BOI Reporting Resource Center.
4. Treasury Department Announcements and Guidance on BOI Reporting.
