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FinCEN Removes Beneficial Ownership Reporting Requirements for Texas-Based Businesses

Entrance of The Treasury Department Building in Washington, DC with Statue of Albert Gallatin, former Secretary of the Treasury
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The Financial Crimes Enforcement Network (FinCEN) has issued an interim final rule that completely exempts all U.S. companies, including Texas businesses, from the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA).

This significant regulatory rollback means that Texas businesses no longer need to file BOI reports with FinCEN. The interim rule was published in the Federal Register on March 21, 2025, and took effect immediately.

Background on the Corporate Transparency Act

The Corporate Transparency Act was enacted on January 1, 2021, as part of the broader Anti-Money Laundering Act of 2020. The CTA established beneficial ownership reporting requirements for corporations, LLCs, and similar entities operating in the United States, with the goal of preventing the use of shell companies for illicit purposes.

Prior to this new interim final rule, FinCEN had implemented these requirements through regulations that became effective on January 1, 2024. Those regulations would have required millions of small businesses across the United States, including many Texas businesses, to report their beneficial ownership information to FinCEN.

However, the BOI reporting deadlines were changed and delayed multiple times due to a series of legal challenges and conflicting court decisions.

The March 21 interim rule reflects both the legal uncertainty surrounding the BOI reporting requirements and the change in regulatory priorities following the January 2025 presidential transition.

Key Changes in the Interim Final Rule

The interim final rule makes the following critical changes:

  1. Complete Exemption for U.S. Companies: All entities created in the United States—including corporations, LLCs, and other similar entities formed in Texas—are now exempt from BOI reporting requirements.
  2. Focus on Foreign Entities Only: Only foreign companies registered to do business in the United States (including Texas) remain subject to reporting requirements.
  3. Exemption for U.S. Beneficial Owners: Even for the foreign entities that must still report, U.S. persons who are beneficial owners are exempt from having their information reported to FinCEN.
  4. New Deadlines for Foreign Entities: Foreign entities registered to do business in Texas or other U.S. states must file their BOI reports within 30 days of the rule's publication (by April 20, 2025). Foreign entities registering to do business after the rule's publication have 30 days from the effective date of their registration to file.

Basis for Issuing the Rule

FinCEN issued this interim final rule following a change in presidential administrations and a reassessment of the balance between regulatory burdens and benefits. The rule cites several key justifications:

  1. Executive Order 14192: Issued by President Trump on January 31, 2025, this executive order directed agencies to "significantly reduce private expenditures required to comply with Federal regulations" and "alleviate unnecessary regulatory burdens."
  2. Balancing Costs and Benefits: FinCEN had previously estimated that compliance with BOI reporting would cost businesses $21.7 billion in the first year alone. The rule cites these substantial burdens on small businesses as disproportionate to the potential benefits.
  3. Focus on Foreign Risks: The rule maintains reporting requirements for foreign entities based on their perceived higher risk profile for money laundering, sanctions evasion, and other illicit financial activities.
  4. Good Cause Exception: FinCEN issued this as an interim final rule (effective immediately without prior public comment) citing the "good cause" exception under the Administrative Procedure Act because waiting for public comment would subject domestic reporting companies to unnecessary compliance costs.

What This Means for Texas Businesses

For Texas-based businesses, the impact is clear and immediate:

  1. No BOI Reporting Required: If your business was formed in Texas or any other U.S. state or tribal jurisdiction, you do not need to file a BOI report with FinCEN.
  2. No Updates Needed: If you previously filed a BOI report with FinCEN before this rule, you do not need to update or correct that report.
  3. No Penalties: Texas businesses will not face penalties for failing to comply with the previous BOI reporting requirements.
  4. Foreign Business Considerations: If you own or operate a foreign entity that is registered to do business in Texas, that entity must still report its beneficial ownership information to FinCEN by April 20, 2025, but is not required to report information about any U.S. persons (defined as "United States citizens or [persons] lawfully admitted for permanent residence") who are beneficial owners.

Looking Ahead

FinCEN is accepting public comments on the interim final rule for 60 days (until May 20, 2025) and intends to issue a final rule later this year. While the current exemptions provide immediate relief for Texas businesses, the final rule could potentially modify these exemptions based on public comments received.

We will continue to monitor developments related to this rule and provide updates as necessary. If you have questions about how this may affect your specific business situation, please contact our office.