More than two years after the U.S. Treasury began accepting beneficial ownership information (BOI) reports, the Financial Crimes Enforcement Network (FinCEN) has issued a final rule exempting U.S. companies and U.S. persons from reporting requirements under the Corporate Transparency Act (CTA).
The move effectively shelves the controversial law for U.S. businesses, which Congress has not repealed despite calls from some business and trade groups to do so.
The CTA was intended to make it harder for bad actors to hide their identities and ill-gotten gains through shell companies and opaque corporate structures. As originally implemented, it required covered companies to report information about their beneficial owners, including names, dates of birth, addresses, and identifying documents such as driver’s licenses or passports. Certain companies were also required to report similar information about their company applicants—the individuals who filed, or were primarily responsible for directing or controlling the filing of, the documents that created or registered the company.
Background
Congress passed the CTA after years of discussion over the problems created by networks of anonymous shell companies. It was part of the National Defense Authorization Act (NDAA) for Fiscal Year 2021 (if the term sounds familiar, the NDAA is the annual law passed by Congress that sets defense policy and authorizes funding levels and programs for the U.S. military and national security activities). In his first term, President Trump vetoed the NDAA for reasons unrelated to the CTA, and Congress overrode his veto in January 2021, shortly before President Joe Biden took office.
The Treasury officially began accepting beneficial ownership information (BOI) reports on January 1, 2024.
As originally implemented, the CTA generally treated as reporting companies both domestic entities created by filing a document with a secretary of state or similar office and foreign entities registered to do business in the United States. It included limited partnerships, limited liability partnerships (LLPs), business trusts, limited liability companies (LLCs), single member limited liability companies (SMLLCs), and corporations—typically, any entity you would have registered with the state.
There were several exemptions—in fact, as written, 23 types of entities are exempt from the reporting requirements. These entities included publicly traded companies, nonprofits, and certain large operating companies, which already had reporting requirements.
Under the CTA, the penalties for non-compliance are harsh. The statute provides for civil penalties of $500 per day, an amount subject to inflation adjustment, as well as criminal penalties of up to two years in prison and a fine of up to $10,000 for willful violations.
Approximately 32 million companies were subject to the CTA in 2024, the first year it took effect.
A Flurry of Lawsuits
Months after the CTA became law, National Small Business United (also known as the National Small Business Association, or NSBA) and Isaac Winkles, an Alabama business owner, filed suit against Janet Yellen in her official capacity (at that time) as the Secretary of the U.S. Department of the Treasury, the Treasury Department, and Himamauli Das, the Acting Director of FinCEN, which is charged with carrying out the CTA. The NSBA argued that Congress lacked constitutional authority to regulate entity formation in this way, an area traditionally governed by state law.
On March 1, 2024, U.S. District Judge Liles C. Burke of the Northern District of Alabama, Northeastern Division, found the CTA unconstitutional “because it exceeds the Constitution’s limits on Congress’ power.”
It was the first of a flurry of lawsuits targeting the CTA nationwide—with mixed results. At one point, appeals from district court cases were pending in four different circuit courts (the 4th, 5th, 9th, and 11th). The matter was even heard at the Supreme Court (SCOTUS addressed emergency applications concerning injunctions against enforcement, not the merits of the CTA itself).
Though the NSBA initially prevailed, the 11th U.S. Circuit Court of Appeals reversed the district court’s ruling in December 2025, upholding the statute’s constitutionality. Despite calls from trade groups for legislative repeal, Congress remained silent, leaving Treasury to resolve the administrative confusion.
Treasury’s Fix
In 2025, Treasury announced that U.S. businesses were not required to comply with the CTA’s beneficial ownership information (BOI) reporting requirements, effectively gutting the 2021 law. The news exempted about 99% of businesses that would otherwise have been impacted.
The final rule, which is effective on its publication in the Federal Register, adopts the exemptions set out in the interim final rule issued in March 2025, which rolled back beneficial ownership information (BOI) reporting by U.S. companies.
Treasury has also confirmed that FinCEN will delete information about any individuals—company applicants, beneficial owners, or recipients of a FinCEN ID—that FinCEN reasonably believes are U.S. persons from the beneficial ownership information database. The details of how that process will work haven’t been made public, but FinCEN says that it “anticipates working with the National Archives and Records Administration (NARA) to ensure FinCEN is abiding by all applicable Federal records laws.”
What This Means For Businesses
If you are a U.S. company or a U.S. person, you don’t have to do anything: U.S. companies and U.S. persons no longer need to report BOI to FinCEN. If you’ve previously reported and obtained FinCEN identifiers (a unique identifying number that FinCEN will issue to an individual or a reporting company upon request after the individual or reporting company provides certain information to FinCEN), you are not required to update or correct the information previously provided to FinCEN.
However, under the final rule, foreign entities that are reporting companies will still be required to report beneficial ownership information for foreign individuals. And individuals who are not U.S. persons still have obligations to update or correct information through the FinCEN identifier application within 30 calendar days after the date of the change.