Finally, more than two years after its enactment, the Corporate Transparency Act (CTA) filing requirements for U.S. entities appears to have been struck a fatal blow.
The Treasury Department, through the Financial Crimes Enforcement Network (FinCEN), has issued an interim rule exempting domestic reporting entities—most entities formally organized in the U.S. – and their beneficial owners from reporting requirements under the CTA. This means that U.S. companies are no longer required to report beneficial ownership information to FinCEN.
While not yet final and still open for public comment, the interim rule will likely be greeted with relief, if not disbelief, by domestic companies and beneficial owners across the U.S.
The interim rule revises the definition of “reporting company” under the CTA to include only those entities formed under the law of a foreign country that have formerly registered to do business in any U.S. state or tribal jurisdiction.
Even foreign reporting companies will not have to report any U.S. persons as beneficial owners. Similarly, U.S. persons will not have to report information regarding any foreign reporting company of which they are a beneficial owner.
The deadlines for foreign entities that are reporting companies are 30 days from the date of publication of the interim rule if they registered to do business in the U.S. before that publication date; and 30 calendar days after notice that registration is effective for entities registering to do business in the U.S. after the date of publication.
Domestic companies which previously filed reports do not have to update or correct previously filed reports under the interim rule. And U.S. companies who did not comply with earlier deadlines are off the hook as well, with FinCEN announcing that it “will further not enforce any beneficial ownership reporting penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners.”
According to the interim rule, its changes are authorized by those provisions of the CTA which allow the creation of exemptions to the statute’s reporting requirements.
FinCEN intends to finalize the rule before the end of the year.
FOS will continue to monitor for any changes or challenges to this interim rule. In the meantime, those beneficial owners of US entities who had waited to file beneficial ownership reports can breathe a sigh of relief and take the reporting off their “to-do” lists. If you have any questions or concerns about how this interim rule affects you, please contact your FOS attorney.
