In this quick BOIR guide, we’ll explore the 23 specific exemptions under the Corporate Transparency Act (CTA). Let’s take a look at their eligibility requirements!
As of January 1, 2024, most small U.S. businesses must file Beneficial Ownership Information reports (BOIR) with the Financial Crimes Enforcement Network (FinCEN). Presently, these reports are mandatory for Reporting Companies, defined as entities required to submit BOI reports.
Therefore, to ensure compliance, understanding the CTA and its exemptions is crucial, and this quick guide aims to simplify the complex regulations.
What the BOIR Exemptions Mean for Businesses
The CTA exemptions offer relief to certain types of businesses, thereby reducing the burden of reporting requirements. Additionally, they provide flexibility and acknowledge that not all entities pose the same risks for money laundering or illicit activities.
Furthermore, by qualifying for an exemption, businesses can streamline their compliance efforts and focus on their core operations.
- Large Operating Companies: Employ over 20 full-time workers, maintain an active U.S. office, and exceed $5,000,000 in gross receipts.
- Inactive Entities: Exist before January 1, 2020, not active, U.S. ownership, and limited funds transactions.
- Bank Exemption: Fit federal banking definitions.
- Credit Union Exemption: Meet federal credit union criteria.
- Holding Company Exemption: Qualify as a bank or savings and loan holding company.
- Money Transmitter Business Exemption: Registered with FinCEN as a money transmitter or services business.
- Securities Broker or Dealer Exemption: Registered under Securities Exchange Act.
- Securities Exchange or Clearing Agency Exemption: Registered under Securities Exchange Act.
- Exemption for Other Registered Entities: Officially registered with the SEC.
- Investment Companies or Advisers Exemption: Defined as an “investment company” or “investment adviser” and documented with the SEC.
- Exemption for Venture Capital Fund Advisers: Investment advisers under the Investment Advisers Act of 1940.
- Insurance Companies: Fit the Investment Company Act of 1940 definition.
- State-Licensed Insurance Producers: Authorized insurance producers with a U.S. presence.
- Commodity Exchange Act Registered Entities: Registered entities under the Commodity Exchange Act.
- Public Accounting Firms: Registered under the Sarbanes-Oxley Act of 2002.
- Public Utilities: Regulated public utilities offering specific U.S. services.
- Financial Market Utilities: Designated by the Financial Stability Oversight Council.
- Pooled Investment Vehicles: Operated or advised by specified entities.
- Tax-Exempt Entities: Fit IRS Code sections or are trusts described in specific sections.
- Entities Assisting Tax-Exempt Entities: Provide financial assistance to tax-exempt entities, U.S. owned and funded.
- Securities Reporting Issuer: Issue securities and registered under Securities Exchange Act.
- Subsidiaries of Certain Exempt Entities: Owned by specified exempt entities.
- Government Authority Exemption: Established under U.S. laws, Indian tribe, State, or agreement between States.
BOIR Special Reporting Rules
- Owned by an Exempt Entity: This exemption allows a business to report the names of entities that own it, rather than listing individual owners, if those entities are already exempt from reporting requirements.
- Minor Child: In this context, a minor child refers to an individual under the legal age of adulthood. If a minor child is a beneficial owner of a business, then the business doesn’t need to report their information; instead, they report the required information about the child’s parent or legal guardian.
- Foreign Pooled Investment Vehicle: This term refers to an investment fund that pools together money from multiple investors, and it is organized and operated outside of the United States. If your businesses is categorized as a foreign pooled investment vehicle, then you have specific reporting requirements under the Corporate Transparency Act.
- Company Applicant Reporting for Existing Companies: This exemption applies to companies that existed or were registered before January 1, 2024. Such companies don’t have to report company applicant information as part of their compliance with the Corporate Transparency Act.
If your company previously qualified for an exemption but no longer meets the criteria, you must act quickly. If you lose your exemption status, then you must file a Beneficial Ownership Information (BOI) report within 30 days.
In any event, this rule emphasizes the need for ongoing checks to ensure your business remains eligible for exemptions under the Corporate Transparency Act. Failing to meet this deadline can result in penalties and legal issues, so it’s essential to stay proactive in compliance.
BOIR Filing Deadlines
- Existing companies: If you are an existing company, then you must file your initial BOI reports by January 1, 2025.
- New companies: If you are a new company, then you must file within 30 days of creation or registration.
BOIR Made Easy With the Exemption Tool
FincenFetch’s Exemption tool is a top choice for firms helping clients with Corporate Transparency Act compliance, mainly because it simplifies exemption checks for businesses and their advisors. Moreover, user-friendly features allow you to quickly assess many client companies, ensuring they meet compliance rules with ease.
But there’s more – FincenFetch offers an exceptional BOIR filing platform that sets it apart from the rest. Because the platform is easy to use and saves time, it is the preferred choice for law and accounting firms. Transition your clients to FincenFetch for smoother compliance and watch your practice thrive!
Ready To Start Filing Your BOIR?
If you are looking for more detailed information about all 23 CTA exemptions and their eligibility criteria, then click here to access our Exemptions guide. It provides a breakdown of each exemption, helping you make informed compliance decisions.
Additionally, discover how easy compliance can be with resources like FincenFetch to streamline your efforts.
Are you ready to see it in action? Schedule your demo today!