The key filing exemptions for the new 2024 BOI ruling

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What Are the Primary FinCEN BOI Exemptions?

The Corporate Transparency Act (CTA) introduced new beneficial ownership reporting requirements set to be effective in 2024. Administered by the Financial Crimes Enforcement Network (FinCEN), these requirements aim to provide clarity on individuals who have significant control over reporting companies or possess substantial ownership interests. However, it’s crucial to recognize that certain entities are exempt from these reporting obligations. Here, we delve into the top five FinCEN BOI exemptions:

Large Operating Companies

These are companies that employ over 20 full-time employees in the U.S., maintain a physical operating presence within the country, and report gross receipts exceeding $5,000,000 on their federal income tax return for the previous year.

Inactive Entities

These refer to companies that were established on or before January 1, 2020, and are not actively engaged in business. They should not be owned by foreign individuals and must not possess any assets. Additionally, they should not have undergone any ownership changes or received funds exceeding $1,000 in the previous calendar or fiscal year.

Tax-Exempt Entities

Generally, these are entities described in Section 501c of the Internal Revenue Code (e.g., charitable organizations, churches and religious organizations, private foundations, political organizations, and/or other nonprofits).

Subsidiaries of Certain Exempt Entities

These entities have their ownership interests controlled or wholly owned, either directly or indirectly, by one or more entities, specifically:

Securities reporting issuer, governmental authority, bank, credit union, depository institution holding company, money services business, broker/dealer in securities, securities exchange or clearing agency, other Exchange Act registered entity, investment company or investment adviser, venture capital fund adviser, insurance company, state-licensed insurance producer, Commodity Exchange Act registered entity, accounting firm, public utility, financial market utility, tax-exempt entity, and/or a large operating company.

Accounting Firms

These are large public accounting firms with more than $5 million in gross receipts and 21 or more full-time employees, and public accounting firms registered with the Public Company Accounting Oversight Board (PCAOB).

Are You Prepared to File?

Overall, while the new BOI reporting requirements aim to enhance transparency and combat financial crimes, it’s essential for entities to assess their status and determine if they fall under any of the exemptions. If uncertain about your company’s obligations, consult with an attorney for a comprehensive assessment.

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