Over the past two decades, the Internal Revenue Service and the Department of Justice have cracked down on the use of offshore accounts and vehicles to evade U.S. income taxes. However, as this column has previously discussed, for years foreign nationals have used limited liability companies and other entities formed under state law to avoid transparency and evade their own tax obligations. See, e.g., J. Temkin, Closed for Business: Shutting Down the US as an Offshore Tax Haven, N.Y.L.J. (May 16, 2019).

In a 2016 report, the Financial Action Task Force (FATF) found that the lack of a federal beneficial ownership information reporting requirement in the United States was problematic from an anti-money laundering and counter-terrorism financing perspective. Almost five years later, Congress passed the Corporate Transparency Act, which requires certain domestic and foreign businesses to file reports with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury disclosing information about their “beneficial owners.” After FinCEN issued a final rule on Sept. 30, 2022, businesses formed or registered prior to Jan. 1, 2024 had until Jan. 1, 2025 to file required reports, and businesses formed or registered after Jan. 1, 2024 had to file within 90 calendar days of their formation or registration.