FTB Legal Ruling 2026-01 clarifies when California can tax an out-of-state trust with a resident
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Tax Byte
FinCEN issued a final rule permanently removing the requirement for U.S. companies and U.S. persons to report beneficial ownership information under the Corporate Transparency Act (31 U.S.C. §5336). The final rule took effect August 14, 2026, on publication in the Federal Register, and cements the rollback that began with the March 2025 interim final rule. FinCEN also announced it will delete previously reported information filed by U.S. persons, who are now exempt, from the BOI database, and it has issued FAQs on the rollback.
The final rule:
- Makes the March 2025 interim final rule exemptions permanent, ending BOI reporting for U.S. companies (31 CFR §1010.380).
- Exempts U.S. persons holding FinCEN IDs from any duty to update or correct the information they originally submitted.
- Drops the requirement for foreign companies to report U.S. person “company applicants,” the individuals who helped register the foreign company to do business in the U.S.
- Exempts foreign pooled investment vehicles registered in the U.S. from reporting BOI of a U.S. person in control of the vehicle.
- Confirms FinCEN will delete information on any individual it reasonably believes is a U.S. person, for example, information linked to a U.S. passport or U.S. driver’s license.
Foreign entities that are reporting companies must still report BOI for foreign individuals.
Tax Practitioner Planning
Clients with foreign-formed entities registered to do business in the U.S. are not off the hook; they still file for their foreign beneficial owners. For domestic clients, no unfiling is needed. FinCEN deletes U.S. person data on its own, and FinCEN ID holders can stop updating. Watch the states, though. New York’s LLC Transparency Act took effect January 1, 2026, and other states may follow with their own disclosure regimes. Update engagement letters that still include BOI monitoring or filing services for domestic entities.
Sources: FinCEN News Release (Aug. 11, 2026); Final Rule (Federal Register); FinCEN FAQs on the Final Rule.
For more tax developments, visit the Western CPE eTax Alerts page at westerncpe.com/etax-alerts/.
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