Are there any exceptions to the BOI reporting requirements?
Yes, there are several exceptions to the Beneficial Ownership Information (BOI) reporting requirements. Certain entities are exempt from filing BOI reports due to their nature, size, or level of regulation they are already subject to. These exceptions include:
Large Operating Companies:
Entities that meet all three of the following criteria are exempt:
Employ more than 20 full-time employees in the United States.
Report more than $5 million in gross receipts or sales to the Internal Revenue Service (IRS).
Have an operating presence at a physical office within the United States.
Governmental Entities:
Federal, state, local, and tribal governmental entities and their instrumentalities are exempt from BOI reporting requirements.
Regulated Entities:
Entities already subject to substantial federal or state regulation are exempt. These include, but are not limited to:
Banks and credit unions.
Bank holding companies.
Registered broker-dealers.
Registered investment companies and advisers.
Insurance companies.
Public accounting firms registered with the Public Company Accounting Oversight Board (PCAOB).
Public utilities and similar regulated entities.
Inactive Entities:
Entities that meet all the following criteria are exempt:
Were in existence on or before a specific date determined by FinCEN.
Are not engaged in active business.
Are not owned by a foreign person.
Have not experienced any change in ownership or significant assets in the past 12 months.
Do not hold assets of any kind (including, for example, equity interests in other entities or real property).
Subsidiaries of Certain Exempt Entities:
Entities wholly owned by one or more exempt entities are also exempt from BOI reporting requirements.
Certain Tax-Exempt Entities:
Nonprofit organizations that are described in sections 501(c), 527, or 4947(a)(1) of the Internal Revenue Code are exempt from reporting beneficial ownership information.
Other Specific Exemptions:
Certain entities that are not included in the above categories but are explicitly exempted by FinCEN regulations. These may include certain pooled investment vehicles and dormant entities meeting specific criteria.
Examples of Exempt Entities:
A large multinational corporation with substantial U.S. operations, a significant number of employees, and high revenue.
A community bank regulated by federal banking authorities.
A local government agency or municipality.
A registered mutual fund or insurance company.
Important Considerations:
Verification of Exemption Status: Entities claiming an exemption should carefully verify their status and maintain documentation to support their exemption claim.
Changes in Circumstances: If an exempt entity's circumstances change and it no longer meets the exemption criteria, it may be required to file a BOI report. For example, if a large operating company reduces its workforce below 20 full-time employees, it may need to comply with BOI reporting requirements.
Consultation with Legal Experts: Due to the complexity of exemption criteria, entities should consult with legal or compliance experts to ensure they qualify for an exemption and to understand their obligations.
Our firm can help determine whether your entity qualifies for any of these exemptions and assist in documenting and verifying your exemption status.