BOI compliance review for prolonged inactivity

Current regulatory framework and major change (FinCEN): FinCEN issued an interim final rule (March 2025) that revises the definition of “reporting company” to include only certain foreign entities registered to do business in the U.S., and removes the requirement for U.S. domestic companies and U.S. persons to report BOI.

The FinCEN BOI page contains an alert describing this interim final rule and the resulting new deadlines for foreign reporting companies (e.g., reporting companies registered before March 26, 2025, had an April 25, 2025 deadline; those registered on or after March 26, 2025, have 30 days after registration to file).

Because of litigation and evolving developments earlier (2024–2025), guidance and enforcement status has changed over time; practitioners should watch for further rulemaking or court decisions. Inactive/dormant entity exemption criteria (FinCEN/Small Entity Compliance Guide and practitioner summaries): FinCEN’s guidance (and multiple practitioner summaries) list a specific set of criteria that, if all met, mean an entity qualifies as an “inactive entity” and is exempt from BOI reporting.

The criteria commonly cited are: (1) entity in existence on or before Jan 1, 2020; (2) not engaged in active business; (3) not owned (directly/indirectly) by a foreign person; (4) no change in ownership in prior 12 months; (5) no receipt or disbursement of more than $1,000 in the prior 12 months (including via financial accounts in which the entity or affiliates had an interest); and (6) holds no assets (including ownership interests in other entities).

Entities that dissolved or ceased to exist prior to the effective reporting dates generally are not required to file; FinCEN FAQs and practitioner alerts address dissolved/withdrawn companies and update the applicability depending on dissolution date.

Practical mechanics (filing, updates, corrections): BOI filings normally occur via the FinCEN BOI e-Filing System; reporting companies (when required) must file initial reports, and then report updates or corrections within prescribed timeframes (e.g., 30 days for certain changes under original rules).

Under FinCEN’s March 2025 interim final rule, U.S. domestic companies generally are no longer required to file, but foreign reporting companies remain subject to deadlines. Penalties and risk: The CTA historically created civil and criminal penalties for willful failure to report or knowingly providing false/misleading information.

Because regulatory scope changed in 2025, exposure for domestic entities may be reduced, but companies should avoid making false statements and should document the basis for any determination that no filing is required.

Litigation and administrative changes could alter enforcement. State-level interaction and considerations: BOI reporting is (federal) FinCEN/CTA-based; it does not replace state-level requirements (annual reports, registered agent rules, franchise taxes, state beneficial owner disclosure where applicable).

State rules vary; maintain good standing with your state of formation and check for any state-specific beneficial ownership or disclosure rules. Practical guidance/checklist for business owners and LLC founders (US): Step 1: Determine whether your entity is a reporting company under current FinCEN rules: check whether (a) it is a foreign entity registered to do business in the U.S. (now the primary reporting-company category per the March 2025 interim final rule) or (b) whether there is any other reason it remains covered.

Step 2: If you think the entity may be exempt as an inactive entity, verify all six FinCEN criteria (formation date relative to 1/1/2020; no ownership changes in prior 12 months; funds/transactions

Current regulatory framework and major change (FinCEN): FinCEN issued an interim final rule (March 2025) that revises the definition of “reporting company” to include only certain foreign entities registered to do business in the U.S., and removes the requirement for U.S. domestic companies and U.S. persons to report BOI.

The FinCEN BOI page contains an alert describing this interim final rule and the resulting new deadlines for foreign reporting companies (e.g., reporting companies registered before March 26, 2025, had an April 25, 2025 deadline; those registered on or after March 26, 2025, have 30 days after registration to file).

Because of litigation and evolving developments earlier (2024–2025), guidance and enforcement status has changed over time; practitioners should watch for further rulemaking or court decisions. Inactive/dormant entity exemption criteria (FinCEN/Small Entity Compliance Guide and practitioner summaries): FinCEN’s guidance (and multiple practitioner summaries) list a specific set of criteria that, if all met, mean an entity qualifies as an “inactive entity” and is exempt from BOI reporting.

The criteria commonly cited are: (1) entity in existence on or before Jan 1, 2020; (2) not engaged in active business; (3) not owned (directly/indirectly) by a foreign person; (4) no change in ownership in prior 12 months; (5) no receipt or disbursement of more than $1,000 in the prior 12 months (including via financial accounts in which the entity or affiliates had an interest); and (6) holds no assets (including ownership interests in other entities).

Entities that dissolved or ceased to exist prior to the effective reporting dates generally are not required to file; FinCEN FAQs and practitioner alerts address dissolved/withdrawn companies and update the applicability depending on dissolution date.

Practical mechanics (filing, updates, corrections): BOI filings normally occur via the FinCEN BOI e-Filing System; reporting companies (when required) must file initial reports, and then report updates or corrections within prescribed timeframes (e.g., 30 days for certain changes under original rules).

Under FinCEN’s March 2025 interim final rule, U.S. domestic companies generally are no longer required to file, but foreign reporting companies remain subject to deadlines. Penalties and risk: The CTA historically created civil and criminal penalties for willful failure to report or knowingly providing false/misleading information.

Because regulatory scope changed in 2025, exposure for domestic entities may be reduced, but companies should avoid making false statements and should document the basis for any determination that no filing is required.

Litigation and administrative changes could alter enforcement. State-level interaction and considerations: BOI reporting is (federal) FinCEN/CTA-based; it does not replace state-level requirements (annual reports, registered agent rules, franchise taxes, state beneficial owner disclosure where applicable).

State rules vary; maintain good standing with your state of formation and check for any state-specific beneficial ownership or disclosure rules. Practical guidance/checklist for business owners and LLC founders (US): Step 1: Determine whether your entity is a reporting company under current FinCEN rules: check whether (a) it is a foreign entity registered to do business in the U.S. (now the primary reporting-company category per the March 2025 interim final rule) or (b) whether there is any other reason it remains covered.

Step 2: If you think the entity may be exempt as an inactive entity, verify all six FinCEN criteria (formation date relative to 1/1/2020; no ownership changes in prior 12 months; funds/transactions