I have written many words about the Beneficial Ownership Information (BOI) reporting requirement of the Corporate Transparency Act (CTA) over the last couple of years and much of my writing has been rendered obsolete by events. So, it came as no surprise on March 21, 2025, when the world changed again, but even I wouldn’t have thought they’d have done the CTA like they done.    

If you want to get to the meat of the latest development, you can skip ahead to the end of this lengthy entry, but for those of you that need a refresher or those that just want to watch me work through my feelings a bit, the next few paragraphs are for you. 

Readers of this blog probably know by now that Congress passed the CTA some years ago for the stated purpose of assisting law enforcement agencies in preventing bad guys (foreign and domestic) from laundering money and hiding assets in the United States using shell companies. In its wisdom, Congress decreed that almost any entity registered with a Secretary of State’s office must file a report detailing the significant stakeholders in the entity and where they might be found.

Under the Biden Administration, the Financial Crimes Enforcement Network (FinCEN), a division of the U.S. Department of the Treasury, came up with a framework of rules, processes, and penalties covering the duty of entities to report BOI. New companies would have 30 days to report the required BOI information to FinCEN; all existing entities would have to make their report by January 1, 2025. 

However, the whole thing did not go off as smoothly as planned for FinCEN.  Across the country (but most especially in Texas) plaintiffs filed lawsuits challenging the reporting requirement as unconstitutional or at least very inconvenient and burdensome. Before FinCEN could even think about imposing its first fine, a Texas federal court entered an injunction enjoining FinCEN from enforcing the BOI reporting requirement while the parties litigated the constitutionality of the Rule.  Game Off!  

The Government appealed this ruling to the Federal Court of Appeals for the Fifth Circuit, which initially removed the injunction. Game On! 

But, just a few days later, the same Court of Appeals, reinstated the injunction.  Game Off!  

The Government (by this time the Trump Administration) remained dogged in its defense of the reporting requirements and appealed the matter to our highest court. There, the United States Supreme Court ultimately sided with the Government and rescinded the injunction in the first Texas case. Game On!  However, by this time a second Texas federal district court had entered its own nationwide injunction against enforcement of the Act. Game Off!  

More time passed, additional words were written, and additional hearings were held, but eventually this other Texas federal district court decided that despite the impassioned argument of the Plaintiffs it did not have authority to ignore the persuasive authority of the Supreme Court’s previous ruling in a nearly identical case. Subsequently, the Texas court (I would like to imagine) somewhat sulkily rescinded its injunction. Game On! Likely a joyous party continued into the wee hours in the FinCEN offices the day it announced that BOI reporting was back, and that the deadline for reporting would for certain be March 21, 2025.  

However, this is the year 2025, and this the Corporate Transparency Act we are talking about, so it was not so simple for the good folks at FinCEN. On February 21, 2025, FinCEN issued a press release indicating that despite the Government’s vigorous effort to defend the Rule all the way the Supreme Court, that it did not plan to enforce the Rule. The press release indicated that FinCEN planned to issue an Interim Rule before the March deadline, but the FinCEN website still promised fines and penalties for anyone failing to comply. Game Off?

On March 21^st, FinCEN issued an Interim Rule that dramatically changed the scope and application of the Rule. First, the Interim Rule specifically exempts United States entities from BOI reporting requirements.  Second, the Interim Rule provides that foreign entities registered to do business in the United States need not report any information about its beneficial owners that are United States individuals. Third, the reporting deadline for foreign entities to file BOI reports was extended to 30 days from the effective date of the Interim Rule.

The Interim Rule certainly reduces the theoretical usefulness of BOI reporting to law enforcement as FinCEN’s database will now only contain information about foreign entities that register in the United States and their foreign beneficial owners. Criminals inclined to set up shell companies to hide their illicit assets probably would be well advised to use entities formed in the United States if that isn’t what they were doing before. Perhaps, the Interim Rule is arguably not what Congress intended, but there is a lot of that going around.

Practically, the reduction in the scope of the Rule will diminish the relevance of the CTA to real estate lawyers. Those attorneys that represent foreign entities doing business in the United States will need to be prepared to advise clients of the reporting requirements that go along with registering their foreign entity in the U.S., but those attorneys representing entities formed in the United States can likely breathe a long sigh of relief.  At least for the moment.