CURRENT MONTH (June 2025)
The Treasury Two-Step: Ongoing Filing Obligations Under the CTA
By William E. H. Quick, Polsinelli PC
An update on the Corporate Transparency Act, and its reporting and amendment obligations.
In an effort to divine the current Corporate Transparency Act (“CTA”) dominion, it is instructive to consider the CTA’s framework and implications prior to the introduction of the recent Interim Final Rule (90 Fed. Reg. 13688 (Mar. 26, 2025)) (“IFR”). The CTA authorizes the Department of the Treasury to exempt specified entities or classes of entities from the definition of “reporting company.” 31 U.S.C. 5336(a)(11)(B)(xxiv). As described in a Financial Crimes Enforcement Network (“FinCEN”) Q&A, “[c]onsistent with the exemptive authority provided in the [CTA] and the direction of the President,” Treasury introduced the IFR, whereby entities previously known as “domestic reporting companies” were exempted from beneficial ownership information (“BOI”) reporting requirements.
Prior to the IFR, FinCEN’s stated position was that “[b]eneficial ownership information reporting requirements apply to all companies that qualify as “reporting companies” . . . , regardless of when they were created or registered. Companies [were] not required to report beneficial ownership information to FinCEN if they [were] exempt . . . before January 1, 2024.” FinCEN BOI FAQ C.12, issued July 8, 2024 (emphasis added). It is important to note that when an entity was exempted from the definition of “reporting company” prior to January 1, 2024, such an exemption was effectively “self-executing” in that no affirmative filing need be made to assert or enjoy such exemption. (That is, “A company does not need to report to FinCEN that it is exempt from the BOI reporting requirements if it has always been exempt.” FAQ L.5, issued Nov. 16, 2023.)
However, if an entity became exempt only after a filing obligation (as distinct from a reporting deadline) already accrued for the entity, then an amendment to a BOI report filing was required for the entity to perfect its exempt status and thereafter no longer be subject to the ongoing filing obligations under the CTA. As stated in FAQ L.5, “If a company filed a BOI report and later qualifies for an exemption, that company should file an updated BOI report to indicate that it is newly exempt from the reporting requirements. . . . An updated BOI report for a newly exempt entity will only require that the entity: (1) identify itself; and (2) check a box noting its newly exempt status.”
This same principle and process appears to apply in the parallel and analogous situation where an entity achieves its exempt status pursuant to the IFR only after a filing obligation (as distinct from a reporting deadline) already accrued for the entity. In such a case, the technical course of action would be to file an amendment to the entity’s BOI report to transition the entity out of its ongoing amendment filing obligations under the CTA. However, whether Treasury expects or would enforce such technical compliance appears doubtful at present, and many business owners may (wittingly or unwittingly) choose to live in the limbo of Treasury’s unprosecuted noncompliance. Stay alert as the CTA and its enforcement dance continue to evolve.
