We have written about several updates to the Corporate Transparency Act as federal court rulings have affected its status over the last year. You may have seen reports that enforcement of the Corporate Transparency Act was set to begin on March 21, 2025. However, on March 2, 2025, the U.S. Treasury Department announced that it will not be implementing the March 21 reporting deadline. Furthermore, the Treasury Department stated that it will be issuing proposed rules that will narrow the scope of the Corporate Transparency Act to apply only to foreign reporting companies. Read on to learn more.  

Enacted in January 2021 to help fight crime including money laundering and fraud, the Corporate Transparency Act (“CTA”) is a federal law that aims to increase transparency around businesses’ ownership. The CTA’s goal is to prevent crime by requiring some businesses to report their ownership details to the federal government. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is responsible for administering the CTA.

It is unclear what businesses will be considered reporting companies when the CTA is eventually enforced. As the Act was originally written, it applied broadly to most American corporations, LLCs, and “other similar entities,” including most privately-owned real estate companies.

However, the Treasury Department announced on March 2, 2025 that the CTA will not be enforced against U.S. citizens or domestic companies, and that instead new rules will be proposed to make the CTA target only foreign entities. We will provide further information when the Treasury Department proposes new rules for the CTA. 

The CTA includes the “Beneficial Owners Rule,” which requires that reporting companies provide information about both the company itself and its owners to FinCEN. Companies subject to the Beneficial Owner Rule must provide the following information:

• full business name
• all trade and “doing business as” names
• the address of the company’s principal place of business
• the jurisdiction where the business was formed or registered
• the business’ Taxpayer Identification Number

The Beneficial Owner Rule also requires reporting companies to provide information about the people who “beneficially own” and/ or “substantially control” the business. The law defines beneficial owners as those who own or control at least 25% of the ownership interests in the company or “substantially control” its business operations. Senior officers, such as general counsel, CFOs, COOs, CEOs, and Presidents, are automatically assumed to have “substantial control” over the companies they work for.

Additionally, any person who has “any other form of substantial control,” such as the authority to appoint or remove officers or decision-making power over significant matters, must be reported to FinCEN. Finally, reporting companies created on or after January 1, 2024 must also report information about the “company applicant,” which is the person(s) who handles the registration and filing of the company.

The Beneficial Owner Rule requires the following information about the company’s owner(s) to be reported:

• full legal name
• date of birth
• residential address (P.O. boxes are not permitted)

Additionally, the beneficial owner(s) will be required to submit “an identifying number from an acceptable identification document such as a passport or U.S. driver’s license, and the name of the issuing state or jurisdiction.”^[1]Beneficial owners who are concerned about data privacy can report their information to FinCEN directly, rather than to the reporting company.^[2]

Failure to report as required (including amendments, as necessary) carries both civil penalties, including $591 per day in fines, and the possibility of criminal prosecution. However, as a reminder, the Treasury Department has stated that it will not be enforcing these regulations against U.S. citizens or domestic companies, but instead will enact rules that narrow the CTA’s scope to apply only to foreign entities.  

As of the publication of this article, we don’t yet know the timeline of the Treasury Department’s proposed rule making or when the CTA would be enforced against foreign entities. This article will be updated as more details become available. 

I am a broker or owner of an existing real estate company in Alabama – does this law apply to me?  

• The CTA is unlikely to apply to your company. Although the original version of the CTA would have included most real estate companies. The Treasury Department has announced they will be narrowing the Act’s scope and focusing only on foreign entities.

I am an agent with a real estate company and have my own LLC through which I receive payments from my broker. Does this law apply to my LLC?

• Similarly to the above, the CTA is unlikely to apply to your LLC. Although the original version of the CTA would have included many licensee owned LLCs. The Treasury Department has announced they will be narrowing the Act’s scope and focusing only on foreign entities.

I own multiple companies, including a referral company and a property management company – does the CTA require me to file a report for each company?  

• Yes. Beneficial owners will have to file a separate report for each of their companies that is covered by the CTA.

Is this a one-time registration?

• No, the law imposes an ongoing duty to report. After the initial registration, the CTA requires that companies report any changes in ownership to FinCEN within 30 days of the change occurring. Additionally, companies will be required to timely correct any errors in reports submitted.  

What does FinCEN cost to file?

• FinCEN does not charge a fee for filing under the Corporate Transparency Act.

How do I report my company/ beneficial owner information?

• Reporting companies can submit their filing to FinCEN using the form found here.  

NOTE: Additional guidance can be found at https://www.fincen.gov/boi-faqs#A_1.