Great Lakes Wire

FinCEN has released a new "interim final rule" concerning the Corporate Transparency Act, which took effect immediately upon publication. This type of rule is issued by government agencies to address urgent situations where waiting for the standard public comment period could cause harm or disruption. After issuance, the agency will accept public comments and may amend or finalize the rule based on feedback.

The interim final rule revises the definition of "reporting company" to include only entities formed under foreign laws that have registered to do business in any U.S. State or Tribal jurisdiction. It exempts entities previously known as "domestic reporting companies" from Beneficial Ownership Information (BOI) reporting requirements.

The new regulation limits reporting requirements to foreign-formed entities doing business in the U.S., exempting them from reporting U.S. persons as beneficial owners. For instance, if two Canadians form a Michigan LLC, they are not required to report it. Similarly, an Ontario corporation registered in Michigan does not need to report its American owners.

An attorney commented: “at this point, the scope of the CTA seems so narrow, at least under the proposed rule, that it will only apply to the uninformed or uncreative.”

While this new rule addresses immediate concerns with the Corporate Transparency Act, there is still a possibility that it could return through administrative means unless struck down or repealed.

Foreign reporting companies have 30 days from when this rule was published to make their first report. Those who believe they fall under this requirement are encouraged to contact SBAM at SBAM@SBAM.org.