8978.01 / What FinCEN reporting requirements apply to LLCs and other small business entities starting in 2024?
Editor’s Note: On March 21, 2025, FinCEN issued an interim final rule that removed the requirement for U.S. companies, persons and entities to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA) of 2021. The rule modifies the definition of reporting company to include only entities that have been created under a foreign country's laws where the entity has 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 formerly classified as “foreign reporting companies” under the law. FinCEN now specifically exempts entities that were previously defined as “domestic reporting companies” from the otherwise applicable BOI reporting requirements. The new rule also completely exempts foreign reporting companies from the need to report BOI for any U.S. persons who are beneficial owners of the foreign reporting company and similarly relieves U.S. persons of the obligation of having to provide BOI to any foreign reporting company in which they are a beneficial owner.
On March 1, 2024, the federal district court for the Northern District of Alabama ruled that the Corporate Transparency Act (CTA) that created the new FinCEN BOI reporting requirements was unconstitutional. The court granted an injunction on enforcement, but that injunction only applied to the plaintiffs (including members of the National Small Business Association (NSBA) and, presumably, reporting companies in the Northern District of Alabama1. Two federal courts in Texas2 granted injunctions to prevent FinCEN from enforcing the BOI reporting requirements on a nationwide basis. As of March 4, 2025, one of those injunctions remains in place (the case is Samantha Smith and Robert Means v. U.S. Department of the Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/2025). The Department of Justice has filed an appeal and FinCEN is reviewing the order. Best practices do dictate that clients should be prepared to comply with the BOI reporting obligations if the injunction is lifted. In the meantime, FinCEN has announced that it will extend the reporting deadline. Reporting obligations will be delayed until a new interim final rule is released (that rule will contain deadlines for reporting, assuming FinCEN's authority to impose the BOI reporting obligations is eventually upheld). As the latest development, the Treasury Department announced its intention to issue proposed rulemaking that would limit BOI reporting obligations to foreign companies.
The beneficial ownership information (BOI) reporting obligations would apply to all domestic reporting companies (including corporations, LLCs, limited partnerships and any entity formed by filing a document with a secretary of state in the U.S). The company's beneficial owners must be identified and reported to FinCEN in an effort to control money laundering and other criminal activity committed through shell companies and other opaque business structures. A "beneficial owner" is a natural person who either 1) exercises substantial control over the company or 2) owns or controls 25% or more of the ownership interests in the company (whether directly or indirectly).