• FinCEN has removed BOI reporting requirements for U.S. companies under the Corporate Transparency Act, ending the need to file ownership details.

• Foreign entities registered to do business in the U.S. must still file BOI reports within 30 days of the new rule’s effective date; a U.S. person who is a beneficial owner of a reporting company is exempt and not required to provide any information.

• Previous BOI filing deadlines and extensions for U.S. companies are no longer relevant due to the new FinCEN rule.

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On March 21, 2025, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule eliminating the beneficial ownership information (BOI) reporting requirement for U.S. companies and U.S. persons under the Corporate Transparency Act (CTA). This new rule supersedes prior guidance and enforcement timelines, including the 30-day filing extension discussed below.

It is important to note that foreign entities registered to do business in the United States remain subject to BOI reporting requirements. These entities must file within 30 days of the interim final rule’s effective date unless further guidance is issued.

U.S. Person Exemption: On any required beneficial ownership interest report, a company reports only non-U.S. beneficial owners. A U.S. person who is a beneficial owner of a reporting company is exempt from the CTA and is not required to provide any information.

We encourage all organizations to review the full FinCEN release and reach out to your legal counsel for advice specific to your situation as we are not able to provide legal guidance on this matter.

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To allow businesses more time to comply, the Financial Crimes Enforcement Network (FinCEN) is extending the BOI reporting deadline by 30 days from February 19, 2025, with most reporting companies now required to file by March 21, 2025.

Key Updates:

• Injunction lifted — BOI reporting rules are now fully reinstated following the February 18, 2025, court decision in Smith, et al. v. U.S. Department of the Treasury, et al.

• New March 21, 2025, deadline — Most reporting companies must submit their initial, updated, or corrected BOI reports by March 21, 2025 (30 days from February 19, 2025).

• Existing later deadlines still apply — If a company already had a BOI filing deadline beyond March 21, 2025 (e.g., those qualifying for disaster relief extensions), it should follow that later deadline.

• Small business association exception — Plaintiffs in National Small Business United v. Yellen, including Isaac Winkles and certain National Small Business Association members (as of March 1, 2024), are not required to report now.

• Potential further deadline modifications — FinCEN is evaluating more deadline adjustments and plans to revise BOI reporting rules to reduce burdens on small businesses while prioritizing higher-risk entities.

Why This Matters for Your Business

Failure to comply with BOI reporting requirements can lead to significant penalties, including fines of up to $606 per day (capped at $10,000) and potential criminal liability. To stay compliant, businesses should first decide whether they qualify as a reporting company, then find beneficial owners and collect the necessary details.

Companies must also ensure they file reports within applicable deadlines and update their filings if ownership details change. Taking these steps now can help your business avoid costly penalties and regulatory issues.

Next Steps

Navigating BOI compliance can be complex, but taking action now can help avoid penalties. Read more about enforcement risks and compliance strategies here.

Have questions about BOI reporting requirements? Contact us today to be connected with professionals who can help.

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The Corporate Transparency Act (CTA) is a significant shift in business reporting requirements, mandating certain companies to show beneficial ownership details to the Financial Crimes Enforcement Network (FinCEN). Designed to combat money laundering, the CTA applies to millions of small- and medium-sized businesses.

A recent nationwide injunction temporarily delayed enforcement of the CTA, but the law’s requirements remain. Your business should prepare now to avoid potential penalties when enforcement resumes. This article outlines the CTA’s requirements, the impact of the injunction, and practical steps for compliance.

Key CTA Requirements

The CTA requires “reporting companies” to show information about beneficial owners, including:

• Full legal name, address, and date of birth

• Unique identifying numbers (such as passport or driver’s license)

• Ownership percentage or decision-making control

The law primarily applies to privately held entities such as LLCs and corporations, though exemptions exist (e.g., publicly traded companies and nonprofits). Companies with complex ownership structures — such as startups, family businesses, or private equity-backed firms — may face challenges reporting beneficial owners.

For a full breakdown of CTA requirements, see Beneficial Ownership Reporting Deadline Approaches – Are You Prepared?.

Nationwide Injunction on Enforcement

A recent court decision temporarily halted FinCEN’s ability to enforce the CTA, delaying the original January 1, 2025, deadline. However, this injunction is unlikely to permanently derail the law. Once legal challenges are resolved, enforcement is expected to resume quickly. The Fifth Circuit has sent this issue to a merits panel. Briefings will start in February, with oral arguments scheduled for March 25, 2025. After these oral arguments, the court will review and issue an opinion. This could push off the information reporting deadline to sometime in the second quarter of 2025. Additionally, an application was filed with the Supreme Court by the Justice Department on December 31, 2024. As of this discussion, the Supreme Court has not yet said if or how it will respond.

Key takeaways from the injunction:

• The delay provides businesses with a brief opportunity to prepare, but compliance will likely remain mandatory.

• Businesses should act now to avoid being caught off guard when enforcement resumes.

Risks of Noncompliance 

When enforcement resumes, businesses not complying could face:

• Fines: Up to $500 per day, capped at $10,000.

• Criminal penalties: Including imprisonment for willful violations.

The CTA’s enforcement will likely include rigorous audits by FinCEN, particularly for companies with layered or opaque ownership structures. Delaying preparation increases the risk of last-minute errors or penalties.

Steps to Prepare for Compliance

Even with enforcement delayed, your business should take proactive steps to comply:

• Conduct an ownership review: Find all individuals with at least 25% ownership or significant control. Document roles, ownership percentages, and needed personal details.

• Gather documentation: Collect valid identification (such as driver’s licenses or passports) for all beneficial owners. Verify that all information is current.

• Assess your filing obligations: Decide whether your company qualifies as a “reporting company” or is exempt. Consult legal or tax advisors if needed.

• Build internal processes: Establish systems for ongoing compliance, including reporting ownership changes to FinCEN.

Industry-Specific Challenges

Some industries face unique compliance challenges:

• Cannabis: Ownership layers required by state licensing can complicate beneficial ownership reporting.

• Technology/startups: Venture capital-backed companies must track frequent changes in ownership.

• Manufacturing and life sciences: Family-owned entities often overlook reporting requirements due to assumptions of exemption.

Understanding how the CTA affects your industry can help reduce risks.

What to Expect Post-Injunction

Businesses should prepare for the following once the injunction is lifted:

• Renewed enforcement: FinCEN will likely resume enforcement with little or no grace period.

• Increased audits: The delay may allow FinCEN to strengthen oversight and audit mechanisms.

• Potential changes: Regulatory adjustments are possible but should not be relied on to end compliance obligations.

Acting now minimizes risks and avoids costly penalties when enforcement resumes.

Final Thoughts

The Corporate Transparency Act is a major regulatory shift that requires proactive planning. While the nationwide injunction delays enforcement, your business should use this time to review ownership structures, collect documentation, and set up compliance processes. Acting early reduces risk and supports readiness when enforcement resumes.

For more detailed guidance, explore our related articles:

• Nationwide Injunction on Corporate Transparency Act Enforcement

• Beneficial Ownership Reporting Deadline Approaches – Are You Prepared?

• Countdown to Corporate Transparency Act Reporting: Is Your Business Prepared?

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What This Means for Your Business

Current Filing Status:

While the CTA remains in effect, the Financial Crimes Enforcement Network (FinCEN) will comply with the court’s order for as long as it remains in effect. Reporting companies are not currently required to file their beneficial ownership information and will not be subject to liability for failing to do so while the preliminary injunction remains in place. However, the obligation to file has already accrued, and further developments may reinstate deadlines. 

Options to Consider: 

1. Businesses Near Completion: Filing now may help minimize future administrative challenges if the injunction is lifted without a grace period. 

2. Businesses Taking a Wait-and-See Approach: Entities may prefer to delay filing while awaiting further legal or regulatory clarity, depending on the complexity of their filings and available resources. 

Legal Landscape: 
This is a preliminary ruling. Appellate courts may overturn the injunction, and a final resolution could take months or longer. Reporting requirements, deadlines, and enforcement mechanisms remain subject to change. 

Next Steps: 

MGO recommends reviewing your reporting status with legal counsel to determine the best approach for your organization. For additional guidance, refer to FinCEN’s BOI reporting website. 

For deeper insights, visit our article: Beneficial Ownership Reporting Deadline Approaches — Are You Prepared? 

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Who Needs to File?

Most U.S. corporations and limited liability companies (LLCs) must report unless they qualify for one of the 23 exemptions.

What Information Must Be Reported?

You’ll need to submit details about “beneficial owners” who:

• Hold or control at least 25% of the company, or
• Exercise substantial influence over business decisions, even without owning shares. 

Beneficial ownership encompasses individuals with control, such as senior officers or those who have authority over company governance. 

Key Deadlines:

• Existing Companies (formed before January 1, 2024): File by January 1, 2025. 
• New Companies (formed after January 1, 2024): Must report within 90 days of registration.

What Are the Risks of Noncompliance?

Failing to comply with the reporting requirements can result in serious consequences. Companies may face civil penalties of up to $10,000 and possible criminal charges. Corrections for errors or omissions must be made within 90 days of the original submission to mitigate penalties.

How Can MGO Support You?

We want to emphasize that the CTA mandate and support materials are detailed and legal in nature. While MGO does not assist in preparing or filing these reports, we can connect you with reputable legal professionals who can help. If you need a referral or have questions, don’t hesitate to contact your MGO advisor.

For more information, visit the FinCEN website.

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• The Corporate Transparency Act (CTA) will require millions of companies (that will be organized or created on or after January 1, 2024) to disclose ownership information to the government starting in 2024. Exemptions exist for certain types of entities.
• “Beneficial owners” who must be reported include those with a 25%+ ownership interest or “substantial control” of the company. Required data that must be provided includes names, DOBs, addresses, and a unique identifying number and issuing jurisdiction from an acceptable identification document (and the image of such document).
• Existing companies (those created before January 1, 2024) must file by January 1, 2025. Non-compliance can result in a civil penalty of $500 per day the violation continues and criminal penalties of up to $10,000 and two years in prison.

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If your corporation or LLC does business in the United States, the clock will soon start ticking for you to report information about your ownership to the U.S. government. As a result of the newly implemented Corporate Transparency Act (CTA), beginning in January 2024, companies will be required to file a Beneficial Ownership Information (BOI) report with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). 

For those who may be unaware or are just getting up to speed on the new CTA requirements, this is a filing you need to have on your radar for a few reasons:  

1. It is broad-reaching and affects millions of companies;  

2. It may require action on your part in the coming year; and  

3. The consequences of non-compliance can be costly and even severe for your business and ownership team.  

Given the importance of this reporting requirement and the possibility of significant penalty exposure, we want to highlight below some of the important aspects of the beneficial ownership interest (“BOI”) reporting requirement.  

We want to emphasize that the CTA mandate and supporting materials are detailed and legal in nature. We advise you to seek legal guidance for your own specific BOI reporting compliance needs. 

As MGO is an accounting firm, we are unable to prepare or assist with these filings. However, if you do not have legal counsel to assist you with this, we can introduce you to legal counsel and/or other service providers who may be able to help you with your reporting needs. 

Using Data Collection to Combat Money Laundering and Terrorism Financing 

Enacted in 2021 as part of the National Defense Authorization Act, the Corporate Transparency Act was created to help detect and prevent tax fraud, money laundering, and other financial crimes. The act aims to weed out malicious actors trying to conceal corporate ownership by making ownership disclosure a federal requirement. 

The CTA is the first law to require business entities to disclose beneficial owners to the government. Businesses will need to identify information about their beneficial owners and file reports with the federal government – a potentially complex process requiring organizations to comply by a set deadline or face stiff penalties. 

Anticipating the initial confusion that will swirl around this new requirement, FinCEN – the bureau of the U.S. Department of the Treasury tasked with managing the collection of ownership information – has proactively published information and resources about BOI reporting to its website. This includes videos, frequently asked questions, and a small entity compliance guide.  

CTA Preparation: Understanding How Reporting Requirements Apply to Your Business 

The first step in preparing for CTA reporting is understanding how it will affect your organization. Here are the critical aspects you need to know about the new CTA requirement: 

Only “reporting companies” need to file beneficial ownership information

Emerging with the CTA is a new set of terms your organization will need to add to its lexicon. One of those terms is “reporting company”, which is any non-exempt company that must file a BOI report. Reporting companies fall into one of the two buckets below: 

• Domestic Reporting Companies: Entities such as corporations and limited liability companies (LLCs) created by filing documents with a secretary of state or similar authority within the United States. 
• Foreign Reporting Companies: Entities formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or similar office under the laws of a state. 

While the CTA places reporting requirements on many businesses, the act grants exemptions to 23 types of entities, including (but not limited to):  

• Publicly traded companies 
• Banks and credit unions 
• Nonprofit organizations 
• Government entities 
• Inactive entities meeting specific criteria 
• Large operating companies 
• Pooled investment vehicles 
• Investment companies 

Most trusts are also not currently categorized as reporting companies since they don’t file formation documents – though that rule could change in the future.  

Understanding whether your organization qualifies for CTA exemptions can potentially save your company unnecessary time, effort, and frustration. While some of the exemption categories are straightforward – covering organizations that already provide ownership-identifying information to the public or government – others warrant closer examination to determine if your organization is eligible.  

For example, “Large operating companies” is an exemption that may be applicable to many businesses. This designation hinges on meeting three key criteria: (1) more than 20 full-time employees in the U.S. (with “full time” defined as working 30 hours or more); (2) U.S. gross receipts or sales (net of returns and allowances) of more than $5 million from the previous year; and (3) having a physical office location in the U.S. that the entity owns or leases (that is not a residence or shared space).

Identifying information must be provided for each “beneficial owner”

A central concept in CTA compliance is reporting “beneficial owners”. Beneficial owners are individuals who either: 

a) Own or control 25% of the company, or  

b) Exercise substantial control.  

FinCEN clarifies “substantial control” to mean serving as senior officer, having authority to remove the senior officer or majority of the board of directors, or wielding the ability to influence important decisions. It is possible to have a reporting company where no individual owns a 25% or greater interest, but it is not possible to have a reporting company where no one has “substantial control”. 

For each beneficial owner, your company will be required to provide: 

• Name 
• Date of birth 
• Residential address 
• Identifying number from identification document such as a passport or U.S. driver’s license 
• Image of identifying document 

When submitting your BOI report, you will also be required to provide company information (legal name, trade or DBA name, principal U.S. address, jurisdiction of formation, TIN) and information about the individual submitting the application. 

Ownership information will not be made public, but certain entities will have access

After you have submitted your BOI, who will be able to access it? This is the question on the minds of many business owners. There are various personal, legal, and financial reasons why a business owner may prefer to keep his or her ownership private. The CTA regulation will likely raise concerns from owners who value anonymity.  

According to FinCEN, ownership information “will be stored in a secure, non-public database using rigorous information security methods and controls typically used in the Federal government to protect non-classified yet sensitive information systems at the highest security level”.  

Other than FinCEN, there are five groups that may be permitted to access beneficial ownership information in its database: 

•  Federal agencies engaged in national security, intelligence, or law enforcement activity 
• State, local, and tribal law enforcement agencies to seek information in a criminal or civil investigation 
• Foreign officials who submit a request through a U.S. federal government agency 
• Financial institutions with the consent of the reporting company 
• Federal functional regulators (e.g., Federal Reserve, FDIC, SEC) in certain circumstances 

Existing and newly created companies have different CTA reporting deadlines 

FinCEN will begin accepting BOI reports on January 1, 2024. All companies required to submit a BOI will do so electronically through a secure filing system on FinCEN’s website. There is no fee for filing this report. There are two different BOI deadlines business owners and operators need to be aware of – one for existing businesses and one for newly created businesses: 

• Existing companies (created/registered before January 1, 2024) must file BOI reports by January 1, 2025 
• New companies (created/registered after January 1, 2024) must file within 90 days of registration. 

Non-compliance with the CTA can result in a civil penalty of $500 per day the violation continues and criminal penalties of up to $10,000 and two years in prison. Correcting omissions or errors within 90 days of the deadline may enable companies to avoid penalties. 

Start Planning Now to Ensure Your Company is CTA Compliant 

The Corporate Transparency Act introduces significant changes to reporting company ownership information. Understanding your obligations and staying informed about CTA developments is essential for navigating this new regulatory landscape while safeguarding your business interests.

As noted earlier, we advise you to seek legal counsel to fulfill this new requirement properly. We can refer you to legal counsel and/or other service providers if you do not already have counsel.  

Additional information on the beneficial ownership reporting requirement can be found on the FinCEN website. Their FAQ is a good starting place. 

We can be available if you have any general questions on this reporting requirement. If you have questions about how CTA requirements will impact your business, reach out to the professionals at MGO today.

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