U.S. Beneficial Ownership Information reporting rules now apply only to foreign entities
The continuing saga over on-again, off-again Beneficial Ownership Information (BOI) reporting rules in the U.S. seems to be settled, at least in the near term. The U.S. Financial Crimes Enforcement Network (FinCEN) has issued an interim final ruling removing the “… requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act.”
The reporting requirement has been enforced, reversed and reinstated yet again over the past several months as the matter has made its way through various levels of the U.S. legal system.
What Canadian companies with U.S. operations need to know
The interim decision did amend the definition of a ‘reporting company’ to include only entities “… formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”).” This means that BOI reporting requirements now apply only to foreign companies, specifically those that do not qualify for an exemption. This will include many Canadian businesses with operations in the U.S. The compliance deadlines for foreign entities that fall under the new definition of ‘reporting companies’ are now set as:
- No later than 30 days from the March 21st, 2025, publication of FinCEN’s interim final ruling (for companies registered to do business in the U.S. before the date of publication of the interim final ruling)
- 30 calendar days (after receiving notice that their registration is effective) for reporting companies registered to do business in the United States on or after the date of publication of the interim final ruling
This means that most foreign entities will now have until April 21st, 2025, to comply. Note that foreign entities will not be required to report U.S. persons who may be beneficial owners of their organization, as the BOI rules no longer apply to U.S. citizens. Canadian organizations doing business South of the Border—notably, those where the primary shareholder is a discretionary trust—should take the BOI reporting obligation seriously. Failure to comply could result in civil penalties of as much as $591 per day, or criminal penalties that could include imprisonment of up to two years and/or a fine of $10,000.
Beneficial ownership reporting can be complex when controlling parties of a trust or beneficiaries must be identified. Always work with a chartered professional accountant with experience in cross-border tax reporting to ensure full compliance.
Armando Iannuzzi, Co-Managing Partner
For more information on reporting requirements for Canadian businesses with U.S. operations, contact a member of the KRP LLP team today.
