Beneficial Ownership Reporting After the Rule Changed
The federal beneficial ownership reporting regime that took effect at the start of 2024 covered nearly every small U.S. entity, foreign-owned or not. Fourteen months and several court rulings later, it covered almost none of them. What remains in scope now is narrower and points specifically at foreign-formed companies, and the rule that narrowed it says plainly that it is not the last word on the subject.
Where the requirement started
The Corporate Transparency Act, enacted as part of the Anti-Money Laundering Act of 2020, directed FinCEN to build a beneficial ownership registry and required most corporations, LLCs, and similar entities formed or registered in the United States to report their beneficial owners, generally meaning individuals owning 25% or more of the entity or exercising substantial control over it, along with certain company applicant information for entities formed after January 1, 2024. The reporting rule implementing this sits at 31 CFR §1010.380. The statute itself, at 31 U.S.C. §5336(a)(11)(B), carved out 23 categories of exempt entities from the start, including banks, credit unions, SEC-reporting issuers, insurance companies, public utilities, and a "large operating company" exemption for entities with more than 20 full-time U.S. employees, more than $5,000,000 in gross receipts or sales reported on the prior year's federal return, and an operating presence at a physical office in the United States. Those 23 exemptions predate and are independent of the narrowing described below; they were always available to entities that met their specific criteria.
The litigation that unsettled it
Before the rule reached its first anniversary, its constitutionality and its scope were both under active challenge in federal court. In National Small Business United v. Yellen, a federal district court in Alabama held the Corporate Transparency Act unconstitutional as applied to the plaintiffs in that case in March 2024. Separately, in Texas Top Cop Shop, Inc. v. Garland, a federal district court in Texas issued a nationwide preliminary injunction against enforcement of the reporting rule in early December 2024; that injunction was stayed by the Fifth Circuit, then reinstated, over the course of the following weeks, producing a period in which reporting companies and their advisers could not reliably say, from one week to the next, whether the January 1, 2025 filing deadline that had applied to pre-2024 entities was actually in effect. FinCEN itself announced it would not enforce the deadline while the litigation was unsettled. That instability is the direct backdrop against which FinCEN issued the interim final rule that currently governs the requirement.
What the March 2025 interim final rule actually changed
FinCEN published an interim final rule in the Federal Register on March 26, 2025, effective immediately on publication. That rule revised the regulatory definition of "reporting company" to mean only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction by filing with a secretary of state or similar office. Entities formed in the United States, previously referred to as domestic reporting companies, were removed from the definition entirely, along with their beneficial owners. The rule further provides that foreign reporting companies are not required to report any U.S. person as a beneficial owner, and that U.S. persons are not required to report with respect to such an entity even where they would otherwise qualify as a beneficial owner of it.
The practical effect is that the population actually required to file under the current rule shrank from nearly every small U.S. business entity to a specific, narrower category: entities formed abroad that have taken the affirmative step of registering to do business in a U.S. state.
| Original rule (through March 2025) | Current interim final rule | |
|---|---|---|
| Entities formed in the United States | Generally reporting companies, subject to the 23 statutory exemptions | Exempted entirely, along with their beneficial owners |
| Foreign-formed entities registered to do business in a U.S. state | Reporting companies | Remain reporting companies |
| U.S. persons who are beneficial owners of a foreign reporting company | Reportable as beneficial owners | Not required to be reported, and not required to report themselves |
| The 23 statutory exemptions (large operating company, bank, SEC issuer, etc.) | Available where criteria are met | Still available, now layered on top of the narrower reporting company definition |
Deadlines under the current rule
For a foreign entity that was already registered to do business in the United States before March 26, 2025, the interim final rule set a filing deadline of April 25, 2025, 30 calendar days after the rule's publication. A foreign entity that registers to do business in the United States on or after March 26, 2025 has 30 calendar days from the date it receives notice that its registration is effective to make its initial filing. An entity that meets one of the 23 statutory exemptions, including the large operating company exemption, is not required to file even if it is otherwise a foreign reporting company under the narrowed definition, provided it can substantiate that it meets the exemption's specific criteria.
Why "interim" is doing real work in that sentence
An interim final rule takes effect immediately, without the notice-and-comment period that ordinarily precedes a final agency rule, but it is not, by its own terms, the agency's last word. FinCEN has stated publicly that it intends to engage in a further rulemaking process and to finalize a revised beneficial ownership reporting rule, and as of this writing that further rule has not been issued. Nothing in the current interim rule guarantees that the narrowed definition it establishes will be the definition that survives finalization, and the litigation history above shows how quickly the scope of this specific requirement has moved over a short period. An entity, or its adviser, relying on the current exemption for domestically formed companies should treat that reliance as good as of the date it is checked, not as a permanent feature of the law.
State-level beneficial ownership statutes are filling part of the gap
As the federal requirement narrowed, at least one state moved to require disclosure independently, and other states have discussed similar proposals without yet enacting comparable statutes as of this writing. New York's LLC Transparency Act took effect January 1, 2026 and, following a December 19, 2025 veto of a bill that would have amended its scope, applies only to LLCs formed outside the United States that are authorized to do business in New York. An LLC in that category registered before January 1, 2026 has until December 31, 2026 to file a disclosure statement or an attestation of exemption; one authorized on or after that date must file within 30 days of applying for its certificate of authority. The practical implication is that federal exemption from the narrowed FinCEN rule does not necessarily mean exemption from every state's own disclosure statute, and an entity registered to do business in multiple states needs to check each state's requirements independently rather than assuming the federal position controls everywhere.
Who counts as a beneficial owner, for the entities still in scope
For a foreign entity that remains a reporting company under the narrowed definition, the underlying definition of beneficial owner has not changed. 31 CFR §1010.380(d) defines a beneficial owner as any individual who, directly or indirectly, either exercises substantial control over the reporting company or owns or controls at least 25% of its ownership interests. Substantial control is defined broadly enough to reach senior officers, individuals with authority to appoint or remove senior officers or a majority of the board, and individuals who direct, determine, or have substantial influence over important decisions the company makes, so the analysis is not limited to counting equity percentages; a minority owner with outsized control rights under a shareholders' or operating agreement can still be a beneficial owner even below the 25% ownership threshold. For entities formed on or after January 1, 2024, the original rule also requires reporting of company applicants, meaning the individual who directly filed the formation document and, where different, the individual primarily responsible for directing that filing; that requirement remains part of the rule's structure for any foreign reporting company formed on or after that date, layered on top of the beneficial ownership disclosure itself.
How a report is actually filed
A beneficial ownership information report is filed electronically through FinCEN's BOI E-Filing system, not through a paper form or through any state agency, and it requires each reported individual's full legal name, date of birth, current residential or business address, and a unique identifying number from an acceptable document such as a passport, along with an image of that document. An initial report is not a one-time filing that stands permanently once submitted; the reporting company must file an updated report within 30 calendar days of any change to previously reported information, including a change in who qualifies as a beneficial owner, a change in an existing beneficial owner's name or address, or a renewed identifying document. A foreign reporting company that files its initial report and then experiences an ownership change, without updating the filing within that 30-day window, is out of compliance with the updating obligation even though its original filing was accurate when made.
Penalties remain on the books
The underlying statute's penalty structure was not repealed by the interim final rule, only the population of entities subject to it. Civil penalties under 31 U.S.C. §5336(h)(3) apply to a person who willfully fails to report complete or updated beneficial ownership information, or who willfully provides false information, with the dollar amount adjusted annually for inflation, and the statute separately authorizes criminal penalties, including imprisonment, for willful violations. Those provisions apply to whoever remains a reporting company under the current definition, meaning primarily foreign-formed entities registered to do business in a U.S. state; they no longer reach a domestically formed entity that has been exempted out of the reporting company definition entirely.
What to actually do with this
Start with formation, not with ownership: determine whether the entity was formed under U.S. law or under the law of a foreign country, because that single fact, not the nationality of its owners, is now the threshold question under the interim final rule. If the entity is foreign-formed, determine whether it is registered to do business in any U.S. state or tribal jurisdiction, and if so, whether that registration predates or postdates March 26, 2025, since that determines which deadline applies. Check separately whether any state where the entity operates or is registered, such as New York, has enacted its own beneficial ownership statute independent of the federal rule. And because this is an interim rule that FinCEN has signaled it intends to revise, recheck the position at the time any filing decision is actually made rather than relying on a determination reached months earlier, particularly if a further rulemaking or new litigation has been reported in the interim.
This is general information about federal and state beneficial ownership reporting requirements as of the date written. The scope of the FinCEN rule described here has changed materially and repeatedly over a short period, is expressly interim, and may change again; confirm the current requirement before relying on any exemption described in this piece, and direct questions about your specific filing obligation to your adviser.