July 9, 2025 - Alerts and Newsletters

        No Need to Report That Your Domestic Entity is Now Exempt from BOI Reporting Requirements

        Through an Interim Final Rule that became effective March 26, 2025 (the “IFR”), the U.S. Treasury Department took action to exclude all U.S.-formed entities from the BOI[1] reporting regime under the Corporate Transparency Act and the associated BOI Reporting Rule administered by FinCEN. “[T]his interim final rule,” Treasury stated, “exempts all domestic reporting companies, and their beneficial owners, from the requirement to file initial BOI reports, or to update or correct previously filed BOI reports, by excluding domestic companies from the scope of the term ‘reporting company,’ pursuant to a determination made by the Secretary under 31 U.S.C. 5336(a)(11)(B)(xxiv).”

        A recent article appearing in Business Law Today suggests that any domestic entity that has already filed a BOI report with FinCEN may “technically” be required under the Corporate Transparency Act to file an updated BOI report stating that it is now an exempt entity. While acknowledging that enforcement by Treasury remains “doubtful,” the author posits that “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.”

        If true, this signals a potentially awkward development for untold numbers of corporate lawyers in the U.S., especially those who dutifully urged their clients to file BOI reports before the end of 2024. A close reading of the IFR, however, supports the conclusion that no such update filing is required, either practically or technically.

        A Key Definitional Change. Codified at 31 U.S.C. § 5336, the Corporate Transparency Act imposes a detailed set of reporting obligations [found in subsection(b)] on each “reporting company” as statutorily defined [in subsection (a)(11)], but also gives Treasury very broad discretion [under subsection (a)(11)(B)(xxiv)] to exclude from that definition “any entity or class of entities” that Treasury, by regulation, determines ‘should be exempt from the [reporting] requirements of subsection (b) …’”[2] Through the IFR, Treasury removed all U.S.-formed entities from the “reporting company” definition that appears in paragraph (c)(1) of the BOI Reporting Rule, as follows:

        (c) Reporting company—

        (1) Definition of reporting company. For purposes of this section, the term “reporting company” means either a domestic reporting company or a foreign reporting company.:

        (i) [Removed and Reserved] The term “domestic reporting company” means any entity that is:

        (A) A corporation;
        (B) A limited liability company; or
        (C) Created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.

        (ii) The term “foreign reporting company” means any Any entity that is:

        (A) A corporation, limited liability company, or other entity;
        (B) Formed under the law of a foreign country; and
        (C) Registered to do business in any State or tribal jurisdiction by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.

        Confusion from a Redundant Exemption? Perhaps as a belt-and-suspenders clarification, Treasury also tacked onto paragraph (c)(2) an additional exemption, seemingly unnecessary due to the change in (c)(1):

        (2) Exemptions. Notwithstanding paragraph (c)(1) of this section, the term “reporting company” does not include:

        * * *

        (xxiv) Domestic entity. Any entity that is:

        (A) A corporation, limited liability company, or other entity; and
        (B) Created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.

        Instead of clarifying, the new (c)(2) exemption is a potential source of confusion. Under the BOI Reporting Rule (both then and now), qualifying for an exemption may itself trigger the obligation to update to an earlier BOI report.

        (a)(2)(ii) If a reporting company meets the criteria for any exemption under paragraph (c)(2) of this section subsequent to the filing of an initial report, this change will be deemed a change with respect to information previously submitted to FinCEN, and the entity shall file an updated report.

        Technical Reading Obviates the Update Requirement. In its IFR, Treasury was quite clear that it intended to relieve domestic entities not only from having to file initial BOI reports, but also from having “to update or correct” previously filed BOI reports. Treasury itself cited its change in the (c)(1) definition of “reporting company” as the source of this relief. That definitional change is, by itself, sufficient to support the conclusion that – notwithstanding arguments to the contrary – the millions of domestic entities that took comfort from the IFR last March are on solid ground without having to file any update to earlier BOI reports.

        [1] BOI stands for “beneficial ownership information.”
        [2] Any such discretionary determination by Treasury requires written concurrence from both the U.S. Attorney General and the Secretary of Homeland Security. The IFR reports that those concurrences were duly obtained.

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