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Understanding Beneficial Ownership Reporting Requirements for 2024

Major Relief for U.S. Businesses: Understanding the 2025 Changes to Beneficial Ownership Reporting Requirements

In a significant development that has brought relief to millions of American business owners, the Financial Crimes Enforcement Network (FinCEN) has dramatically revised the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act. As of March 26, 2025, all entities created in the United States — including those previously known as “domestic reporting companies” — and their beneficial owners are now exempt from the requirement to report beneficial ownership information to FinCEN.

What Changed and Why It Matters

The Financial Crimes Enforcement Network issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information to FinCEN under the Corporate Transparency Act. This represents a complete reversal from the original requirements that would have affected approximately 32 million businesses across the country.

According to FinCEN, the changes to the BOI reporting requirement were driven by the reassessment of the balance between the usefulness of collecting BOI and the regulatory burdens imposed by the BOI rule conducted by the new presidential administration. FinCEN estimates that the number of reporting companies required to submit BOI reports will decrease from about 32.5 million to 11,667.

Understanding the Original Corporate Transparency Act

The bipartisan Corporate Transparency Act, enacted in 2021 to curb illicit finance, requires many companies doing business in the United States to report information about the individuals who ultimately own or control them. Certain types of corporations, limited liability companies, and other similar entities created in or registered to do business in the United States must report information about their beneficial owners—the persons who ultimately own or control the company—to FinCEN as of Jan. 1, 2024.

The law was designed to combat money laundering, terrorist financing, corruption, and tax fraud by creating transparency around business ownership structures. Corporate anonymity enables money laundering, drug trafficking, terrorism, and corruption. It harms American citizens and puts law-abiding small businesses at a disadvantage.

Who Still Needs to Report

While U.S. companies are now exempt, foreign entities still have reporting obligations. FinCEN’s new interim final rule requires only “foreign reporting companies” – foreign entities registered to do business in the United States by filing a document with a secretary of state or a similar office – to file BOI reports.

The deadlines for foreign companies are:

What Information Was Required Under the Original Rules

Understanding what was originally required helps businesses appreciate the significance of this exemption. A reporting company is required to provide basic information for itself and all beneficial owners. For the reporting company, the required information includes legal name, trade names, address, jurisdiction of registration, and its taxpayer identification number. For the beneficial owners, the required information includes name, date of birth, residential address, and an identifying number from an identification document such as a passport or driver’s license.

A Beneficial Owner is anyone who directly or indirectly exercises substantial control over or owns or controls at least 25 percent interest in a business.

Implications for Business Owners and Accountants

This change has significant implications for business owners who were preparing to comply with the original requirements. Many had already begun gathering the necessary documentation and working with their professional advisors to ensure compliance. For businesses in areas like Milford and throughout Pennsylvania and New York, professional tax resolution services like those offered by accountant milford providers have been helping clients navigate these complex regulatory changes.

The exemption eliminates substantial compliance costs and administrative burdens that would have fallen on small businesses. The expected costs of the rule originally included $21.7 billion in initial reporting costs in year 1 ($3.3 billion annually on average in each subsequent year) and $1.0 billion in year 1 updating costs ($2.3 billion expected to be incurred for similar activities in each subsequent year). Correspondingly, estimates for the five-year average cost per year were $6,996,732,512 for initial reports and $2,033,391,518 for updated reports.

Staying Vigilant Against Fraud

Even with these exemptions, business owners should remain alert to potential scams. Do not send money in response to any mailing regarding filing your beneficial ownership information report that claims to be from FinCEN or another government agency. Those e-mails or letters could be fraudulent. FinCEN does NOT send initial correspondence regarding CTA penalties via e-mail or over the phone.

Looking Forward

FinCEN is accepting comments on this interim final rule until May 27, 2025, and intends to finalize the rule later this year. This provides an opportunity for stakeholders to provide input on the changes.

For business owners, this development represents a significant reduction in regulatory burden and compliance costs. However, it’s important to stay informed about any future changes to these requirements and to work with qualified professionals to ensure ongoing compliance with all applicable tax and regulatory obligations.

The exemption of U.S. companies from beneficial ownership reporting requirements marks a major shift in regulatory policy, providing relief to millions of small businesses while maintaining oversight of foreign entities operating in the United States. As these rules continue to evolve, businesses should maintain awareness of their obligations and seek professional guidance when needed.