From Confusion to Exclusion: Another Twist in the CTA Saga - BOI Exemption for Domestic Businesses
By: Colton Adams, Associate: Meridian Law
For business owners and legal professionals trying to keep up with the Corporate Transparency Act (CTA), the past year has been a rollercoaster of legal battles, shifting deadlines, and regulatory pivots—and saga has just taken yet another unexpected turn.
On March 21, 2025, the U.S. Treasury Department issued an interim final rule that significantly revises the CTA reporting requirements by exempting domestic companies from Beneficial Ownership Information (BOI) reporting. Under the interim final rule, only “foreign reporting companies” will be required to report BOI to the Financial Crimes Enforcement Network (FinCEN).[1]
Key Changes Under the Interim Final Rule:
Consistent with the Treasury Department’s March 2 announcement, which stated that CTA enforcement would not apply to U.S. citizens or domestic businesses, the interim final rule provides the following key changes:
Domestic Companies will be Fully Exempt: Entities previously defined as “domestic reporting companies,” and their beneficial owners are exempted from all BOI reporting requirements. [2]
Enforcement Against Foreign Companies with Noncitizen Beneficial Owners: The definition of “reporting company” now only applies to “foreign reporting companies.”[3] Under the interim final rule, foreign entities still subject to BOI reporting will have 30 days to comply.
U.S. Citizens Exempt: U.S. citizens are no longer required to provide or update BOI to foreign reporting companies.
While this is welcome news for most U.S.-based companies, those with foreign ownership interests or non-U.S. beneficial owners should still evaluate whether they fall under the revised rule.
How Did We Get Here?
Since its enactment in 2021, the CTA has faced numerous legal, political, and regulatory challenges, leading to shifting compliance deadlines and uncertainty for businesses. Here’s a brief timeline of key developments to-date:
· 2021: Congress passes the Corporate Transparency Act (CTA) as part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021, with overwhelming bipartisan support.
· 2022-2023: FinCEN issues and finalizes the original BOI reporting rules, setting January 1, 2024 as the initial deadline for BOI reporting obligations. Over the years, this deadline is extended multiple times by FinCEN.
· 2024: Numerous legal challenges are initiated in federal courts across the country, with some courts preliminarily finding that the CTA is unconstitutional and issuing nationwide injunctions to halt enforcement.
· January 23, 2025: The U.S. Supreme Court lifted the nationwide injunction, reinstating CTA enforcement. McHenry v. Texas Top Cop Shop, Inc., 145 S. Ct. 1 (2025).
· February 18, 2025: A coalition of 19 state Secretaries of State, including Tennessee, urged President Trump to support the CTA's repeal, citing concerns over its impact on small businesses.
· March 2, 2025: The U.S. Treasury Department announced it would not enforce BOI reporting against U.S. citizens or domestic companies, proposing to limit the requirements to foreign entities.
· March 10, 2025: Senators Sheldon Whitehouse (D-RI) and Chuck Grassley (R-IA) sent a letter to Treasury Secretary Scott Bessent seeking clarification on the decision to suspend CTA enforcement for domestic entities. They emphasized the CTA’s importance, bipartisan support, and requested information regarding what steps have been taken to change the BOI rule.
· March 21, 2025: In response and consistent with its prior announcement, the Treasury Department issued an interim final rule that removes the requirement for U.S. companies and U.S. citizens to report BOI under the CTA.
What’s Next?
FinCEN is accepting public comments on this interim rule and expects to finalize it later this year. There are also ongoing legislative efforts to eliminate the CTA altogether. This means that the interim rule and BOI reporting requirements are still subject to further developments and possible changes.
For more details, read the full FinCEN announcement here: https://fincen.gov/news/news-releases/fincen-removes-beneficial-ownership-reporting-requirements-us-companies-and-us.
If you have questions about whether your business is affected, or need help navigating these evolving requirements, please contact Meridian Law.
For more on business law and regulatory compliance updates, follow our firm’s blog or schedule a consultation with one of our attorneys.
*Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Meridian Law, PLLC, or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting based on any information included in or accessible through this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country, or other appropriate licensing jurisdiction.
[1] You can check out the interim final rule here: https://fincen.gov/sites/default/files/federal_register_notices/2025-03-21/CTAIFR3-21-25-FINAL508.pdf.
[2] Under the interim final rule, “domestic reporting company” will be added to the list of exempted entities at 31 CFR 1010.380(c)(2). A “domestic reporting company” was previously defined at 31 CFR 1010.380(c)(1)(i) as “a corporation; a limited liability company; or other entity that is 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.”
[3] A “foreign reporting company” was defined at 31 CFR 1010.380(c)(1)(ii) 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.” (emphasis added).