Next Steps for Companies that Filed CTA Reports
Millions of reporting companies breathed a sigh of relief on March 21, 2025, when the US Financial Crimes Enforcement Network (“FinCEN”) issued an interim final rule (the “IFR”) that exempted all domestic entities from beneficial ownership information reporting requirements under the Corporate Transparency Act (the “CTA”).
Many of these companies had not yet made a CTA filing under the prior iteration of the rule, and therefore, will now never need to make a CTA filing. However, millions of reporting companies did submit CTA filings, and even going forward, the reporting requirement remains in effect for several thousand foreign reporting companies.
In this Legal Update, we address some of the outstanding questions that companies may have if they already made, or will be required to make, a CTA filing under the IFR.
Q: Should I deregister my domestic reporting company if I already made a CTA filing?
A: No, in fact, you cannot do so through FinCEN’s current reporting system. The CTA filing system does not allow a reporting company to deregister. Prior to the IFR, FinCEN had explained that even if a company dissolves its existence, it cannot deregister from the reporting system or withdraw previously filed CTA reports.
While a domestic reporting company could make a new CTA filing that removes previously reported beneficial owners and asserts that the company is a “newly exempt entity,” we do not believe this is required (see next question), or that it will result in FinCEN deleting the previously reported information. Of course, a company may choose to make such a filing as a commercial accommodation, such as if an investor requests that an entity make an updated CTA filing to remove a foreign person as a beneficial owner so that the foreign person no longer needs to update their FinCEN ID information.1
Q: Do I need to continue to update my CTA filings if I previously made a CTA filing, but am now excluded from the definition of reporting company?
A: Most likely not. Reporting companies are required to make an updated CTA filing if previously reported information changes. The rule specifically applies this requirement to reporting companies, not all entities.
The IFR both (i) removes domestic reporting companies from the definition of reporting company, and (ii) adds an exemption for domestic reporting companies. The reporting rules generally do not impose an obligation for an entity to make updated CTA filings if it no longer is a reporting company (e.g., foreign entity after it de-registers in all US states). While the IFR does not expressly state that it has the same effect as a dissolution or deregistration, that likely is a reasonable interpretation. Therefore, entities that previously were domestic reporting companies should not need to make updated CTA filings.
Q: If I am an entity that previously made a CTA filing as a domestic reporting company, do I need to make another filing to assert that I am a newly exempt entity?
A: Most likely not. Reporting companies are required to make an updated CTA filing if they qualify for an exemption to reporting subsequent to making their initial CTA filing. This updated filing is referred to as a “newly exempt entity” filing.
The IFR both (i) removes domestic reporting companies from the definition of reporting company, and (ii) adds an exemption for domestic reporting companies. The reporting rules generally do not impose an obligation for an entity to notify FinCEN that it no longer is a reporting company (e.g., when a US corporation dissolves). While the IFR does not expressly state that it has the same effect as a dissolution or deregistration, that is likely a reasonable interpretation. Therefore, entities that previously were domestic reporting companies should not need to make a “newly exempt entity” filing.2
Q: If I am a foreign reporting company that previously reported US person beneficial owners, am I required to make an updated CTA filing that omits those individuals?
A: It is unclear, but a foreign reporting company probably does not need to make an updated filing that omits US person beneficial owners until information on the original CTA filing changes.
While FinCEN requires a reporting company to make an updated CTA filing if there is a change in previously reported information, the IFR’s exemption for reporting information of US person beneficial ownership arguably does not change the previously reported information. The US persons remain beneficial owners as the term is defined in the rule, although there is no longer an obligation to report them. In theory, a reporting company could even continue to report the US person beneficial owners on future CTA filings on a voluntary basis. Therefore, a foreign reporting company should not need to make an updated CTA filing to remove those individuals until there is an actual change in the information that it previously reported.
Of course, there also is nothing that prevents the reporting company from making a voluntary updated CTA filing to remove beneficial owners who are US persons. This may be appropriate as a commercial accommodation if a US person requests that a foreign reporting company make an updated CTA filing so that the US person no longer needs to update their FinCEN ID information (see discussion below on updating FinCEN IDs).
Q: If I am a foreign reporting company that remains subject to a CTA filing obligation, do I need to submit a report if there are no beneficial owners to report (i.e., all beneficial owners are US persons)?
A: Yes. Neither the IFR, nor the original rule, creates an exemption from filing if a reporting company has no beneficial owners to report. If a foreign reporting company has only US person beneficial owners, then the company would need to make a CTA filing, but would not be required to disclose information for the US persons. This would lead to the somewhat odd situation of the CTA filing disclosing no beneficial owners, which FinCEN has revised its reporting system to accept.3
Q: I obtained a FinCEN identifier for an entity to use in its reporting. Do I need to continue to keep that updated with FinCEN?
A: Unclear, but unlikely in most cases.
It is debatable whether the obligation to update FinCEN ID information remains in effect for any US person beneficial owners, or for foreign persons who previously were reported on a domestic reporting company’s CTA filing.4 Notably, the IFR states that no US person is required to provide beneficial ownership information with respect to any reporting company for which they are a beneficial owner, which arguably includes the obligation to provide updated information through the FinCEN ID portal.5 The exemption in the IFR should therefore generally override the obligation for a US person to update their FinCEN ID information.6
A US person who is the company applicant for a foreign reporting company will most likely need to continue to update their FinCEN ID information.
A foreign person whose FinCEN ID remains on the report of a domestic reporting company that has not made an updated CTA filing might have an obligation to update the FinCEN ID information. However, it is not clear what purpose the update would serve, or if the individual’s obligation would be extinguished by removing them from the CTA filing.7
A foreign person whose FinCEN ID has been reported by a foreign reporting company will need to continue to update their FinCEN ID information. This should be the case regardless of whether the foreign person is a beneficial owner or a company applicant.
Q: If I am a reporting company that is incorporated or registered in the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau, am I required to make CTA filings after the IFR?
A: Unclear, but possibly yes. The original reporting rule stated that a domestic reporting company was an entity “created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe.” For this purpose, a State was defined as any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, American Samoa, Guam, the United States Virgin Islands, and any other commonwealth, territory, or possession of the United States. These definitions carried over to the IFR.
FinCEN’s report system indicates that entities created under the laws of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau are domestic reporting companies, even though those jurisdictions are not within the definition of “State.”
It would seem reasonable for entities to rely on the express text of the reporting rule to continue to exclude entities created under the laws of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau from the definition of domestic reporting company. Similarly, entities created under the laws of another jurisdiction (e.g., a Japanese corporation registered to do business in the Republic of Palau) would seem to have a reasonable basis to conclude that they are not foreign reporting companies.
However, entities created under the laws of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau that register to do business in a State would most likely be foreign reporting companies that remain subject to a CTA filing obligation. As indicated below in the context of redomiciled companies, it is unlikely that these companies could rely on the exemption for domestic reporting companies.
Q: Am I eligible for the exemption for domestic reporting companies if I am a foreign reporting company that redomiciled from a US state and subsequently registered to do business in a US state?
A: Probably not. A company that redomiciles from a US state to a foreign jurisdiction might argue that it was “created by the filing of a document with a secretary of state,” and therefore, eligible for the exemption for domestic reporting companies. However, it is likely that FinCEN would assert that foreign reporting company and domestic reporting company categories are mutually exclusive.
While the IFR muddies that exclusivity by adding an exemption for domestic reporting companies, which should not be necessary if only foreign reporting companies remain subject to the reporting requirement, foreign reporting companies that have re-domiciled from a US state should consider continuing to comply with the CTA.
1 It is debatable whether the obligation to update FinCEN ID information remains in effect for any US person beneficial owners or for foreign persons who previously were reported on a domestic reporting company’s CTA filing. A further discussion is in our answer to the FinCEN ID question, below. Our example of a commercial accommodation to an investor’s request should not be taken to address the issue of whether the US person otherwise has an obligation to continue to update their FinCEN ID information.
2 If an entity remains within the IFR’s definition of reporting company and qualifies for the domestic company exemption, then it most likely would need to make an updated CTA filing as a newly exempt entity. This should be a rare occurrence given the structure of the reporting rule.
3 It appears that the FinCEN reporting system still will not accept voluntary filings by domestic reporting companies that list no beneficial owners. Further, if the foreign reporting company registered to do business in the United States prior to 2024, there would be no company applicants to be reported. Meaning that no individuals would be disclosed on the company’s CTA filing.
4 31 C.F.R. § 1010.380(b)(4)(iii)(A).
5 31 C.F.R. § 1010.380(d)(4)(ii).
6 However, if a US person is a company applicant, then the exemption from reporting is unlikely to apply. For example, a US person who is the company applicant for a foreign reporting company is likely required to update their FinCEN ID information. While one might think that they would need to update their FinCEN ID only as long as the foreign reporting company remains registered to do business in the United States, FinCEN has implied otherwise in its FAQs. FinCEN, FAQ M.5 (Sept. 29, 2024). Interestingly, a company applicant should not be required to provide updated beneficial ownership information to the foreign reporting company if they have no FinCEN ID. See FinCEN, FAQ E.4 (Nov. 16, 2023).
7 The same issue exists for a US person if they acted as a company applicant for a domestic reporting company.
