BOI Whiplash: Domestic Companies Now Exempted

Foreign reporting companies will still be subject to BOI reporting

After various courts stayed injunctions against enforcing the beneficial ownership information (BOI) reporting rule, FinCEN announced that almost all reporting companies had until March 21, 2025, to comply with the new rule. However, the announcement mentioned forthcoming relief to the reporting requirement for business owners.

On Sunday, March 2, the Treasury Department announced that it will not enforce the reporting rule against domestic reporting companies and plans to issue proposed regulations to revise it so that only foreign reporting companies must file a BOI report. Treasury also reiterated that it will not impose penalties under the existing regulatory deadlines until the new reporting rule takes effect.

What This Means

The forthcoming new reporting rule will exempt domestic reporting companies, including limited liability companies (LLCs) and corporations formed under state law, from the BOI reporting requirement. In addition, FinCEN will not take enforcement actions against domestic reporting companies that do not meet the BOI reporting requirement under the current rule.

BOI reporting is dead for domestic reporting companies. These entities do not need to file any BOI reports going forward, including by the previously announced March 21, 2025 deadline.

Foreign Reporting Companies

Based on the press release, foreign reporting companies will continue to be subject to the BOI reporting rule. While no enforcement actions will be taken until the new reporting rule takes effect, it remains prudent for foreign reporting companies to file their BOI report as part of their U.S. tax return preparation process this year.

Under 31 C.F.R. §1010.380(c)(1)(ii), a foreign reporting company is any entity that is a corporation, LLC, or other entity formed under the law of a foreign country, and 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.

Is This Change Legal?

Selective enforcement of a law, pending future changes or not, is nothing new. For example, the IRS has refused to enforce the new Form 1099-K reporting threshold for years and only recently announced it will take full effect in 2026. It should have been in effect for the 2023 tax year; the IRS did a three-year enforcement phase-in.

While the statute intended for domestic reporting companies to have to file a report in some circumstances, 31 U.S.C. §5336(b)(1)(F)(iii) directs the Treasury Department to

minimize burdens on reporting companies associated with the collection of the information described in paragraph (2), in light of the private compliance costs placed on legitimate businesses, including by identifying any steps taken to mitigate the costs relating to compliance with the collection of information…

In addition, 31 U.S.C. §5336(b)(1)(F)(iv) directs the Treasury Department to

collect information described in paragraph (2) in a form and manner that ensures the information is highly useful in facilitating important national security, intelligence, and law enforcement activities; and confirming beneficial ownership information provided to financial institutions to facilitate the compliance of the financial institutions with anti-money laundering, countering the financing of terrorism, and customer due diligence requirements under applicable law.

These changes also likely make the lawsuits against the constitutionality of the Corporate Transparency Act moot, as the plaintiffs in the various cases would no longer have a BOI reporting requirement.

Join the Conversation

As a paid subscriber, you can discuss this topic in the comments section. Please keep the discussion related to this edition’s topic.

Learn More About Tom

Please take a look at my website to learn about the educational opportunities I offer the tax professional community.