Exempt Entities

Entities may qualify for exemptions from BOI reporting under specific conditions outlined by FinCEN. The exemptions include:

• Tax-Exempt Entities: Organizations exempt from tax under sections 501(a) and 527(a) of the Internal Revenue Code, including certain trusts under section 4947(a), are exempt from BOI reporting. This includes entities recently lost their tax-exempt status (within 180 days).
• Inactive Entities: Entities that were in existence before January 1, 2020, and meet specific criteria such as not engaging in active business, not being owned by a foreign person, not experiencing changes in ownership, not transacting over $1000 in the past twelve months, and not holding any assets.
• Subsidiary Exemptions: Subsidiaries wholly owned or controlled by certain exempt entities, such as banks, credit unions, investment companies, insurance companies, and significant operating companies, are exempt from reporting.
• Large Operating Company Exemption: Entities employing more than 20 full-time employees in the United States and meeting other specific criteria qualify for this exemption but cannot consolidate employees across multiple entities to meet the criteria.
  
  Entities that qualify for an exemption and have not previously filed a BOI report do not need to report their exempt status to FinCEN. However, if a previously non-exempt entity becomes exempt, it must file an updated BOI report indicating the new exempt status. Importantly, subsidiaries must be fully controlled by an exempt entity to qualify for the subsidiary exemption; partial control does not meet the exemption criteria.
  
  These exemptions aim to reduce the reporting burden on certain types of organizations and entities, ensuring that the focus remains on those where transparency is most crucial for combating financial crimes and enhancing corporate transparency.