On March 21, 2025, the U.S. Department of the Treasury released its interim final rules describing which entities are subject to Corporate Transparency Act (CTA) reporting and what information must be submitted by such entities.  As a result of the interim final rules, U.S.-based reporting companies and beneficial owners are now exempt from CTA reporting requirements.

Review the key points of FinCEN’s interim final rules below, particularly if you have any connection to a foreign reporting company, which is defined in the CTA as “any entity that is: (A) a corporation, limited liability company, or other entity; (B) formed under the law of a foreign country; and (C) 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”:

1. All domestic reporting companies and their beneficial owners are exempt from CTA reporting, meaning they are not required to submit beneficial ownership information reports to FinCEN.

2. Domestic reporting companies who have already submitted beneficial ownership information reports are not required to submit any further reports, including to update any information.

3. Foreign reporting companies are required to submit beneficial ownership information reports related to the entity itself and any foreign persons who are considered beneficial owners of such entity.

4. Foreign reporting companies are not required to submit the beneficial ownership information of any beneficial owner who is a U.S. person.  Furthermore, beneficial owners who are U.S. persons are not required to provide their beneficial ownership information to such foreign reporting companies.

5. Foreign reporting companies whose beneficial owners are all U.S. persons are exempt from reporting any beneficial owners (information about the foreign reporting companies will still be required).

6. Foreign pooled investment vehicles are exempt from reporting any U.S. persons who exercise substantial control over the entity.

7. The updated CTA reporting deadline for a foreign reporting company is: (i) for a new foreign reporting company, 30 days from its registration to do business in the U.S., or (ii) for an existing foreign reporting company, 30 days from March 21, 2025.

The interim final rules are open for public comment.  Comments may be submitted by either of the following methods provided by FinCEN:

Federal E-rulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. Refer to Docket Number FINCEN-2025-0001, the Office of Management and Budget (OMB) control number 1506-0076, and Regulatory Identification Number (RIN) 1506-AB49.

Mail: Policy Division, Financial Crimes Enforcement Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-2025-0001, OMB control number 1506-0076 and RIN 1506-AB49.

The CTA originally became effective on January 1, 2024 and required the vast majority of companies in the US to disclose sensitive information about their “Beneficial Owners” by January 1, 2025 (now extended) in an effort to prevent money laundering and other illegal activities by bad actors.

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On December 3, 2024, the US District Court for the Eastern District of Texas in the case of Texas Top Cop Shop, Inc. v. Garland ruled that the CTA was likely unconstitutional, concluding that the CTA and its reporting requirements could not be enforced by the Financial Crimes Enforcement Network (“FinCEN”). However, the Department of the Treasury appealed this ruling, and on December 23, 2024, the US Court of Appeals granted a stay of the District Court’s preliminary injunction, pending the outcome of the Department of the Treasury’s appeal. The effect of this decision is that all non-exempt Reporting Companies are required by law to submit beneficial ownership information (“BOI”) reports to FinCEN. Certain extensions have been granted by FinCEN to accommodate certain Reporting Companies.

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The reporting deadline for Reporting Companies created before January 1, 2024 has been extended to Monday, January 13, 2025.
 

Additional reporting deadlines in effect for applicable entities are as follows:

• Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.

• Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.

• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.

• Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial BOI reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

• Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.

On December 3, 2024, a federal judge from the US District Court for the Eastern District of Texas issued a sweeping order prohibiting the federal government from enforcing the CTA anywhere in the country.
 
Reporting Companies are no longer required to comply with the CTA unless the Court’s Order is overturned on appeal or a new law is enacted by Congress.
 
In the matter of Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.), the Court held that the CTA was likely unconstitutional and that its implementation would irreparably harm reporting companies forced to comply. The Court enjoined the CTA’s enforcement nationwide, specifically stating that neither the CTA nor its related regulations may be enforced, and that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline[.]”
 
The Court determined that Congress exceeded its legislative powers when it enacted the CTA, which the Court characterized as “quasi-Orwellian.” In the Court’s view, upholding the CTA and its requirement that most entities created or registered under state law must continually disclose information to the federal government “would be to rubber-stamp a new form of federal power” that would “threaten the very fabric of our system of federalism.” The Court saw the CTA as a dangerous precedent, observing that “[i]f the Court were to sanction such an extension of legislative power today, then there is no telling how Congress would control companies tomorrow.” The Court further found that forcing reporting companies to comply with the CTA substantially threatens the constitutional rights of such companies. Given what the Court considers the CTA’s constitutional flaws and threatened harm, the Court enjoined the federal government from enforcement of the CTA and its reporting requirements pending further order of the Court.
 
This ruling may be appealed, in which case a final determination will not be made for some time. However, until determined otherwise, the CTA and its reporting requirements are unenforceable by the federal government.
 

Teeple Hall, LLP is pleased to announce that Anthony Gomez, J.D., CPA, Esq., has joined the firm as a Senior Associate Attorney. At Teeple Hall, LLP, Mr. Gomez handles a variety of legal and tax matters in the Firm’s Private Client, Corporate & Transactional, International, and Tax Practice Groups. In this role, Mr. Gomez oversees the day-to-day management of the Firm’s tax reporting and compliance practices. Mr. Gomez handles matters in a variety of focus areas including income tax, private client tax, audit and tax controversy, U.S. foreign compliance, international business transactions, citizenship and tax residency, and more.

With his accounting and tax reporting background, designation as a Certified Public Accountant, and eight (8) years of work experience with two Big Four accounting firms in Los Angeles and San Diego, Mr. Gomez brings a wealth of knowledge of tax law and corporate transactions that uniquely position him to navigate the complexities of domestic and international tax law. Having been engaged in legal and financial services since 2014, Mr. Gomez possesses experience collaborating with domestic and international teams, providing strategic insights on acquisitions, dispositions, and restructurings. His multifaceted background exemplifies the Firm’s values, ensuring clients receive unparalleled legal support.

In addition to his credentials as a CPA, Mr. Gomez holds a Juris Doctor from LMU Loyola Law School with concentrations in Tax Law and Corporate Law, as well as a Bachelor of Accountancy and Master of Science in Taxation from the University of San Diego.

Mr. Gomez’s professional memberships include the State Bar of California as well as the California Board of Accountancy. His scholarly contributions include the publication “The Hanging Paragraph – Hanging on Every Word”, a scholarly article regarding the ability of consumers to bifurcate their debt between secured and unsecured claims when filing for bankruptcy. Beyond his professional achievements, Mr. Gomez actively volunteers with organizations such as Public Counsel-Pasadena and Thrive Scholars, as well as serving as a teaching assistant at an elementary school, coaching little league baseball, and engaging in additional community-oriented activities.

Teeple Hall, LLP is pleased to announce that Christopher Thien, Esq., has joined the firm as an Associate Attorney. At Teeple Hall, LLP, Mr. Thien handles a variety of legal matters in the Firm’s Private Client and Corporate & Transactional Practice Groups. In his role at the Firm, Mr. Thien focuses on entity formation, entity governance, business transactions, and compliance reporting under the Corporate Transparency Act.

Mr. Thien has been practicing law since 2020 and has experience in serving as outside counsel for a wide range of businesses advising companies on corporate legal matters such as stock purchase agreements, asset purchase agreements, corporate formation and management, and real estate transactions.

Mr. Thien holds a Bachelor of Arts degree in Business Management Economics from University of California, Santa Cruz, and a Juris Doctor from University of San Diego School of Law.

Outside of his work at the Firm, Mr. Thien is a member of several local, regional, and international organizations, including the California Bar Association and the San Diego County Bar Association. Mr. Thien also actively supports several causes including affordable housing and was recently a Board Member at Large with the Building Industry Association’s young professionals division, yGEN.

On December 21, 2021, the Internal Revenue Service (“IRS”) announced that the competent authorities of the U.S. and Malta entered into a Competent Authority Agreement (the “CAA”) confirming the meaning of “pension fund” as relating to the interpretation of the U.S. – Malta Income Tax Treaty (the “Treaty”). The IRS had previously expressed their position that the meaning of “pension fund” was being mischaracterized and that persons were relying on the Treaty to take aggressive tax positions.  Following the execution of the CAA, the IRS is actively examining taxpayers who utilized Malta pension plans and intends to seek enforcement action when deemed appropriate. The IRS admonishes such taxpayers to fully review any such Malta pension planning with an independent tax advisor prior to filing their 2021 tax returns.

Read the full IRS Press Release here:  https://www.irs.gov/newsroom/united-states-malta-sign-a-competent-authority-arrangement-caa-confirming-pension-fund-meaning

Starting in the early 2000’s the IRS, Treasury Department, and the Department of Justice greatly expanded their enforcement actions on the U.S. reporting obligations for U.S. Persons with interests in foreign trusts, entities and financial accounts. These expanded enforcement activities against perceived and actual tax evasion, reporting and compliance evasion, and non-compliance, resulted in a number of initiatives and programs by the IRS to press for compliance while providing an opportunity to bring recalcitrant U.S. taxpayers into compliance. Though the IRS OVDI and OVDP programs of the 2007 – 2018 reporting era have ended, a number of voluntary disclosure options remain. However, a key element of any voluntary disclosure is that it is made on a timely, voluntary and complete basis, before (i) any disclosure of a name or account has occurred or (ii) existence of any audit or investigation.

If you have questions or concerns regarding U.S. compliance and tax matters for your foreign financial accounts, assets or structures (including the utilization of Malta pension plans), please contact our office to discuss your matter in a confidential and privileged manner.

Today, the U.S. Department of Justice for the Southern District of New York filed a criminal information charging Swiss Life Holdings AG and three subsidiaries (together, “Swiss Life Entities”) with conspiring to commit tax evasion for U.S. taxpayers through the use of illicit life insurance policies.  The DOJ also announced that they entered into a Deferred Prosecution Agreement (a “DPA”) with Swiss Life Entities by which they agreed to accept responsibility for their criminal conduct.   The DOJ’s actions today represent yet another step in the DOJ and U.S. Treasury Department’s campaign to expose and prosecute those who are involved in the setup and use of foreign financial accounts, products and structures that assist U.S. taxpayers to circumvent and evade their U.S. tax obligations.  

Read the full DOJ Press Release here.

https://www.justice.gov/usao-sdny/pr/switzerland-s-largest-insurance-company-and-three-subsidiaries-admit-conspiring-us

Starting in the early 2000’s and rapidly expanding during the period 2005 – 2007, the IRS, Treasury Department, and the Department of Justice greatly expanded their enforcement actions on the U.S reporting obligations for U.S. Persons with interests in foreign trusts, entities and financial accounts. These expanded enforcement activities against perceived and actual tax evasion, reporting and compliance evasion, and non-compliance, resulted in a number of initiatives and programs by the IRS to press for compliance while providing an opportunity to bring recalcitrant U.S taxpayers into compliance. Though the IRS OVDI and OVDP programs of the 2007 – 2018 reporting era have ended, a number of voluntary disclosure options remain.   However, a key element of any voluntary disclosure is that it is done voluntarily, before (i) any disclosure of a name or account has occurred or (ii) existence of any audit or investigation.

If you have questions or concerns regarding U.S. compliance and tax matters for your foreign financial accounts, assets or structure, please contact our office to discuss your matter in a confidential and privileged manner.

Teeple Hall, LLP is pleased to announce their co-sponsorship of the twenty-third annual American Law Institute Continuing Legal Education Webinar on International Trust and Estate Planning 2020 to be held December 9 – 10, 2020.  Join this comprehensive annual program for the latest information and high-level guidance on taxation, trusts, and estate planning for U.S. and international estate planning clients. 

Teeple Hall, LLP is pleased to announce their co-sponsorship of the twenty-second annual American Law Institute Continuing Legal Education conference on International Trust and Estate Planning 2019 to be held November 14 – 15, 2019 in Washington, DC.  This annual event is the premier course offering the high-level information and strategies necessary to effectively advise both U.S. and international trust estate planning clients. 

Teeple Hall, LLP is pleased to announce their sponsorship of this one-of-a-kind program by the American Law Institute Continuing Legal Education conference on Estate Planning for the Family Business Owner 2019 to be held October 24–25, 2019 in Phoenix, Arizona.  This comprehensive program on estate planning for family business owners is designed for estate lawyers, accountants, those who advise privately-owned businesses, and those who own private businesses.