What Do I Do As A Newly Exempt Entity Under BOI Rule?

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How To Respond as a Newly Exempt Entity Under BOI Rule

If a company has previously filed a Beneficial Ownership Information Report (BOIR) under the Corporate Transparency Act (CTA) and subsequently undergoes structural or ownership changes that grant it an exempt status, it is no longer mandated to submit updates to FinCEN. However, simply ceasing updates is not the first step if your company becomes exempt; certain measures must be taken in light of this new status.

Understanding BOIR

The Beneficial Ownership Information Report (BOIR) is a critical reporting requirement created under the CTA, and which triggers filing requirements beginning January 1, 2024. These disclosure rules mandate that certain entities disclose information about their beneficial owners and potentially their company applicants as well to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. These reporting companies must also report any changes in beneficial owner information within 30 days of the change occurring. 

What to Do If Your Company Becomes Exempt

If your company becomes exempt from filing a BOIR after having previously submitted a report, several steps should be taken to ensure compliance: 

1. Consult with legal counsel or regulatory authorities to confirm that your company meets the criteria for exemption under the BOI rule.
2. Once it is determined that your company is exempt, you must report to FinCEN that your company is “newly-exempt” by selecting the applicable box on a new BOIR. Other information to be provided on this final report includes the FinCEN Identifier that was assigned from the initial report or legal name, tax ID type, tax ID number, and country/state of jurisdiction of the newly-exempt entity. This information will be used to tie the report to the previous filing.
3. Retain all records and documentation related to your previous BOIR filings, as these may be needed for audits or inquiries in the future.
4. Continue to seek advice from legal and financial professionals to stay informed about any changes in regulatory requirements that may affect your company and its exemption status. 

Are Your Prepared for the CTA? 

If your company becomes exempt from filing a BOIR after previously reporting, it is important to confirm your exemption status, file a new BOIR, retain records, and stay informed about ongoing compliance obligations. Remaining vigilant and proactive in your approach to regulatory compliance is key to navigating the evolving landscape of corporate transparency and financial regulation.

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