Corporate Transparency Act Reporting Requirements: What Changed and Who Still Files

If you formed an LLC or corporation in California and spent late 2024 worrying about beneficial ownership reporting deadlines and $591-per-day penalties, here is the short version: you almost certainly do not have to file. On March 21, 2025, the Financial Crimes Enforcement Network issued an interim final rule exempting all entities formed in the United States — and their beneficial owners — from Corporate Transparency Act reporting. The rule eliminated the filing obligation for more than 99% of the companies originally covered.

That is a genuine relief for the roughly four million small businesses operating in California. It is also the source of persistent confusion, because a great deal of published guidance still describes the original 2024 rules as if they were in force, and third-party filing services continue to solicit business from companies that no longer owe a report. At The Law Office of Pietro Canestrelli, we field these questions regularly from business owners across Temecula, Murrieta, San Diego, and the Inland Empire.

This page explains what the Corporate Transparency Act required, what the March 2025 rule changed, who still has an obligation, and what California business owners should do with the records they already prepared. If your situation is not clearly covered below, contact our California business tax attorneys.

What the Corporate Transparency Act Was Designed to Do

Congress enacted the Corporate Transparency Act as part of the Anti-Money Laundering Act of 2020. The premise was that anonymous shell companies were being used to move illicit funds, and that requiring companies to disclose the humans behind them would make that harder. The statute directed FinCEN, a bureau of the Treasury Department, to build a non-public database of beneficial ownership information accessible to law enforcement and, under limited conditions, to financial institutions.

The original reporting rule took effect January 1, 2024. It applied to “reporting companies” — corporations, LLCs, limited partnerships, and other entities created by filing a document with a secretary of state, plus foreign entities registered to do business in a U.S. state. Twenty-three exemption categories covered banks, insurers, registered investment advisers, public companies, tax-exempt organizations, and “large operating companies” with more than 20 full-time U.S. employees, more than $5 million in gross receipts, and a physical U.S. office.

Each reporting company had to identify its beneficial owners: anyone exercising substantial control, and anyone owning 25% or more. For each, the company reported legal name, date of birth, residential address, and an identifying document number with an image.

What the March 2025 Rule Changed

The rule met sustained litigation. Federal courts issued conflicting injunctions through 2024 and early 2025, deadlines were suspended and reinstated more than once, and Treasury announced in March 2025 that it would not enforce penalties against domestic companies.

FinCEN then issued an interim final rule, published March 26, 2025 and effective March 21, 2025, that resolved the question structurally. The rule revised the definition of “reporting company” to include only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction. Entities formed in the United States — every California LLC, corporation, and limited partnership — are no longer reporting companies at all. They are outside the rule, not merely excused from a deadline.

The rule also exempts U.S. persons from being reported as beneficial owners of foreign reporting companies, and relieves foreign reporting companies of any obligation to report U.S.-person beneficial owners.

Who Still Has to File

A filing obligation survives only for foreign reporting companies: entities formed under foreign law that have registered to do business in a U.S. state. Those entities report their non-U.S. beneficial owners.

The situations where this actually comes up for our clients:

• A company organized in Mexico, Canada, or the United Kingdom that registers with the California Secretary of State to operate in San Diego or Los Angeles.
• A foreign parent that registers a branch rather than forming a U.S. subsidiary. Note the distinction — if the parent forms a Delaware or California subsidiary, that subsidiary is domestic and exempt.
• An offshore holding structure holding California real estate through a foreign entity registered in-state.

Cross-border ownership frequently carries other reporting obligations that are easy to conflate with the CTA and that were not relaxed — FBAR filings for foreign financial accounts over $10,000, Form 8938 under FATCA, Form 5471 for foreign corporations, and Form 3520 for foreign gifts and trusts. These carry serious penalties and remain fully in force. Our page on FBAR and FATCA compliance covers those requirements.

What California Business Owners Should Do Now

If you already filed a BOI report

Nothing further is required. There is no obligation to update or correct a report filed by an entity that is no longer a reporting company. The information remains in FinCEN’s database.

If you never filed

If your entity was formed in the United States, no filing is due and no penalty accrues. Ignore solicitations warning of daily penalties — these mailings, some designed to resemble government notices, have been a persistent scam targeting small businesses since 2024.

If you paid a service to file, or to file annually

Check whether you are on a recurring plan. There is no annual BOI filing for a domestic entity, and there never was for one that has not changed ownership.

Keep the ownership records anyway

This is the practical point most owners miss. Assembling beneficial ownership documentation in 2024 was tedious, and the instinct now is to discard it. Do not. That file — cap table, operating agreement, member identification, control provisions — is the same documentation that resolves an ownership question in an IRS or Franchise Tax Board examination, supports basis on a sale, and satisfies a bank’s own customer due diligence rules, which are independent of the CTA and unchanged.

In our experience representing California businesses in business tax audits, the single most common documentary failure is an inability to substantiate who owned what, when. Keep the file.

Could the Rule Change Again?

It could. The March 2025 rule was issued as an interim final rule, which invites public comment and can be revised. Congressional proposals to restore domestic reporting have been introduced, and litigation over the statute’s constitutionality has continued in parallel. A May 2026 Government Accountability Office report examined the effects of the narrowed rule on law enforcement access, which is the kind of finding that can prompt legislative response.

For now, the operative rule is the one in effect: domestic entities do not report. We monitor this for business clients and will flag a change if one comes. If you are forming an entity, our business formation practice builds ownership documentation as a matter of course, which is the position you want to be in if reporting returns.

Southern California Considerations

The Inland Empire and San Diego County have unusually high concentrations of two entity types affected by the cross-border rules: family-held real estate holding companies, often stacked across several LLCs, and businesses with Mexican ownership operating in the border economy. In the first case, the layered structure typically raised difficult “substantial control” questions under the old rule — questions that simply no longer arise for domestic entities.

In the second, the analysis is genuinely fact-dependent. A San Diego company formed in California with Mexican owners is domestic and exempt. A Mexican company registered with the California Secretary of State to operate here is foreign and reports. The distinction turns on where the entity was formed, not on who owns it. Getting that backwards produces either an unnecessary filing or a missed one.

Frequently Asked Questions

Do I still have to file a BOI report for my California LLC?

No. FinCEN’s interim final rule effective March 21, 2025 exempts all entities formed in the United States from beneficial ownership reporting. A California LLC is not a reporting company.

Is the Corporate Transparency Act repealed?

No. The statute remains law. FinCEN narrowed the reporting rule so it applies only to foreign entities registered to do business in the United States.

What happens to the report I already filed?

It stays in FinCEN’s database. You have no obligation to update, amend, or withdraw it.

Are there penalties for not filing before the rule changed?

Treasury announced in March 2025 that it would not enforce penalties against U.S. citizens or domestic reporting companies, and the interim final rule removed the obligation entirely. Domestic entities face no exposure.

My foreign company is registered in California — what do I file?

A foreign reporting company files BOI for its non-U.S. beneficial owners; U.S.-person owners are excluded. Timing depends on your registration date. This is worth confirming with counsel, because the penalty exposure for a genuine reporting company is real.

Does this change my FBAR or FATCA obligations?

Not at all. Those are separate requirements under different statutes, and both remain fully enforced with substantial penalties.

Get a Clear Answer on Your Entity

Most California business owners can close this file. The ones who cannot — foreign entities registered here, and businesses with cross-border ownership carrying other international reporting duties — need a specific answer rather than a general one.

Pietro Canestrelli holds an LL.M. in Taxation and advises businesses on entity structure, compliance, and controversy throughout Temecula, Murrieta, San Diego, and the Inland Empire. If you are unsure where your entity falls, or you want your ownership documentation reviewed before it is ever tested, schedule a consultation with our business tax attorneys. You can also review our business law services and LLC guidance.