Overview
WHAT HAPPENED?
On March 2, 2025, and February 27, 2025, the US Department of the Treasury (Treasury) and the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury, made significant announcements regarding the Beneficial Ownership Information Reporting Requirements final rule (31 C.F.R. 1010.380) (Reporting Rule) promulgated under the Corporate Transparency Act (CTA) (31 U.S.C. § 5336).
In Depth
FinCEN announced that that there will be no penalties, fines, or enforcement actions for failing to comply with the new March 21, 2025, deadline to file beneficial ownership information (BOI) reports, which was previously announced on February 18, 2025. FinCEN also intends to further extend reporting deadlines and propose changes to the Reporting Rule later this year “to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities.”
Treasury announced that it will not enforce any penalties or fines against US citizens or “domestic reporting companies” or their “beneficial owners” (which are defined in the CTA and Reporting Rule) even after any forthcoming deadline extensions or changes to the Reporting Rule. Treasury plans to issue proposed rulemaking to narrow the scope of the Reporting Rule, applying it only to “foreign reporting companies” (currently defined as a corporation, limited liability company, or other entity formed under the laws of a non-US country and registered to do business in the US by filing a document with a secretary of state or similar office under the laws of a US state, including any US territory, or Indian Tribe.
WHAT NOW?
- No Immediate Action Required: Reporting companies that have not yet submitted BOI reports should consider waiting to submit BOI reports until new guidance is issued by FinCEN/Treasury. No penalties or fines will apply for failing to file BOI reports by the current March 21, 2025, deadline.
- No Penalties for US Citizens and Domestic Reporting Companies: Even after any new deadline extension or rule changes, Treasury will not impose penalties or fines on US citizens or domestic reporting companies (or their beneficial owners) in connection with BOI reporting.
- Potential Narrowing of Reporting Obligations: If Treasury’s proposed rulemaking goes into effect, BOI reporting obligations will only apply to “foreign reporting companies” and not “domestic reporting companies” (currently defined as any corporation, limited liability company, or other entity created by filing a document with a secretary of state or similar office under the laws of a US state, including any US territory, or Indian Tribe.
McDermott will continue to monitor relevant developments. If you have any questions or need advice on the CTA or its application to your business, please contact your regular McDermott lawyer or one of the authors of this client alert.
