BOI Reporting Exemptions
The Corporate Transparency Act is a law that requires most businesses in the US to report ownership information to the Financial Crimes Enforcement Network (FinCEN). This means most businesses in the US will need to file a form called the Beneficial Ownership Information (BOI) Report with the federal government. But there are exemptions—23, to be exact. Here, we’ll break down which businesses won’t need to file a BOI Report.
In this article, we'll cover:
Reporting Company Exemptions
A reporting company is any limited liability company (LLC), corporation, or company formed with an U.S. American state or tribe, as well as companies registered to do business in the U.S. but formed in a foreign country. Most of these businesses are required to file a BOI Report. However, there are several exemptions depending on the business’ other reporting requirements and level of risk to national security. Let’s go over which businesses qualify for exemptions.
Large Operating Companies
The main category of businesses that will be exempt from filing a Beneficial Owner Information Report are “large operating companies.”
Under the Corporate Transparency Act, a large operating company is exempt if it does all of the following:
- Reports more than $5 million in gross sales or receipts in the previous tax year (excluding foreign-sourced sales) on these IRS forms: Form 1120, consolidated Form 1120, Form 1120-S, Form 1065, or other applicable form
- Operates from a leased or owned physical office in the US, where the entity conducts business on a regular basis
- Employs more than 20 full-time employees, who work an average of 30 hours per week (or 130 hours per month)
Full-time employees must all work at the same entity and can not be spread out across multiple entities or affiliates. You’re allowed to consolidate the earnings of multiple businesses to meet the $5 million requirement.
Money Services Businesses
Most banks and credit unions are exempt from filing a BOI Report, as long as they meet certain conditions. We’ve broken out the businesses and conditions, if any, they must meet to qualify.
| Business Type | Conditions for Exemption |
| Public accounting firms | None |
| Financial market utility businesses | Must be overseen by the Financial Stability Oversight Council. |
| Federal and state credit unions | None |
| Money transferring or transmitting services | Must be registered with the Federal Crimes Enforcement Network (FinCEN). |
| Bank, savings, or loan holding companies | None |
| Federally insured national or state banks | None |
| Accounting firms | Must be registered with the Public Company Accounting Oversight Board. |
| Foreign currency exchange businesses | Must be registered with FinCEN. |
| Financial market utility companies | Must be registered with the Financial Stability Oversight Council. |
| Money services businesses | Must be registered with FinCEN. |
Investment Companies
When it comes to companies involved in investments and securities or the trading of stocks, the CTA exempts any entity that is registered with the Securities and Exchange Commission (SEC) or any other federal agency. Those businesses include:
| Business Type | Conditions for Exemption |
| Pooled investment vehicles | Must be overseen by a bank, credit union, registered broker-dealer, federally registered investment company, investment adviser, or a venture capital fund adviser. Must also qualify as an exempt company under the Investment Company Act, meaning the business can not make public offerings of its securities and must limit its fund to someone who owns $5 million or more in investments. |
| Trading intermediary businesses, like commodity pool operators and advisors, floor brokers and traders, retail foreign exchange dealers, and swap dealers. | Must be registered with the Commodity Futures Trading Commission (CFTC). |
| Investment advisement businesses and investment companies or advisers | Must be registered with the Securities and Exchange Commission (SEC). |
| Venture capital investment advisers | Must have filed Form ADV with SEC and reported their control persons, direct owners, executive officers, and indirect owners. |
| Commodity pool operators and trading advisers | Must be registered with CFTC. |
| Broker-dealers, brokers, and dealers | Must be registered with SEC. |
| Registered issuer of securities | Must be registered with SEC or file reports with SEC, like annual and quarterly forms 10-K, 8-K, and 10-Q. |
| Security exchange or clearing agencies | Must be registered with SEC. |
While investment advisers registered with SEC are exempt, private investment advisers are not exempt from filing their BOI Report. There is also no exemption for commodity pools not registered with the CFTC. There are also some pooled investment vehicles that are not exempt if they do not have their company applicant and BOI info on their Form ADV.
Insurance Industry
Insurance companies that provide company applicant and beneficial ownership information to a state or federal agency are exempt from filing a BOI Report.
| Business Type | Conditions for Exemption |
| Insurance producer | Must be registered with their state insurance regulators.
Must have a physical operating office in the United States. |
| Insurance companies | Must be registered with their state insurance regulators.
Must have a physical operating office in the United States. |
Public Utilities
Businesses that act as public utility companies are exempt if they are regulated and registered with a federal or state agency.
| Business Type | Conditions for Exemption |
| Electric company | Must be registered with state utilities agencies. |
| Telecommunication company | Must be registered with state utilities agencies. |
| Gas company | Must be registered with state utilities agencies. |
| Water and sewer services or sewage disposal service | Must be registered with state utilities agencies. |
| Non-motorcycle public transportation | Must be registered with state utilities agencies. |
| Transporters of gas, oil, or other petroleum products by pipe line | Must be registered with the Federal Energy Regulatory Commission or
Must be registered with state railroad or gas and oil commission. |
| Railroad transporters | Must be registered with the Federal Energy Regulatory Commission or
Must be registered with state transportation agency. |
| Air transportation services | Must be registered with the Federal Motor Carrier Safety Administration. |
| Water carrier transportation services | Must be registered with the Federal Motor Carrier Safety Administration. |
| Rail carrier or railroad leaser | Must have all properties leased with leases for more than 20 years and 80% income coming from leases. |
Other Businesses
There are a few more exemptions we go over below. Be mindful that FinCEN and other offices may update these exemptions and include more.
| Business Type | Conditions for Exemption |
| Subsidiaries* | Must be a subsidiary of a tax-exempt entity or
Must be a subsidiary of CTA exempted business. |
| Publicly Trade Companies | Must be registered with SEC.
Must file reports with SEC, like annual and quarterly forms 10-K, 8-K, and 10-Q. |
| Churches | Must be tax-exempt.
Must have filed recent annual return with IRS if required. |
| Charities | Must be tax-exempt.
Must have filed recent annual return with IRS if required. |
| Nonprofits | Must be tax-exempt.
Must have filed recent annual return with IRS if required. |
| Law enforcement | Must be a risk to national security or intelligence. |
| Inactive entities | Must be inactive and in existence before January 1, 2020.
Must not be owned by foreign person. Must have no change in ownership in last year.
Must have no fund transfers of more than $1,000 in past year.
Must have no assets held. |
| Government agencies | Must exercise government authority for a state, federal, political, or tribal division.
Must be established in the US or tribal territory. |
| Tax-exempt entities | Must provide only financial assistance.
Must be owned by US resident or receive money from a US resident. |
*The subsidiary exemption does not extend to subsidiaries of money services businesses, pooled investment vehicles, large foreign companies, entities that assist a tax-exempt entity, and certain inactive entities.
Beneficial Owner Exemptions
In addition to types of businesses that are exempt from filing a BOI Report, there are people who are exempt from being listed as beneficial owners. The CTA outlines five types of individuals who cannot be beneficial owners. Those exemptions include:
- Minor children*
- Anyone acting as a nominee, intermediary, custodian, or agent on behalf of another individual, like lawyers, accountants, or proxies
- Anyone acting solely as an employee who is not a senior officer
- Anyone who only holds interest through an inheritance
- Certain creditors
*If you do have a beneficial owner who is under 18 years of age, you will need to list their parents’ or guardians’ information on your BOI Report.
BOI Reporting Exemptions FAQs
If you lose exemption eligibility status, you have 30 days to file a BOI Report. You will also need to notify FinCEN and update your BOI Report if your business becomes exempt again. You can do so through the same online system once you’ve filed.
You’ll be subject to a $591-a-day fine up to $10,000 for each day that you do not file. There is also a chance of imprisonment for two years. In some cases, both a fine and jail time are the penalties.
Existing businesses will have until January 2025 to file their BOI Report with FinCEN.
New businesses that file their formation paperwork in 2024 will need to file their BOI Report within 90 days of forming a business, while businesses formed after January 1, 2025 will have 30 days.
A beneficial owner is someone who has significant control or interest in a business. Significant control usually means having 25% or more controlling interest in your company or being in a position to make changes to the company, like senior officers or a board of directors.
A company applicant is an individual (or two) who is responsible for directing, drafting, and submitting a business’s formation paperwork. This could be a business owner directing someone else to file on their behalf, an attorney filing the paperwork, or an employee hiring a third party. If someone is directly in charge of the information, including how and when to file, they are likely a company applicant.
Possibly, but unlikely. The Secretary of the Treasury has the right to add exemptions to the list, but FinCEN has the final say on any additional exemptions.
Yes, you can have someone else file your BOI Report on your behalf.
Want to keep your information secure? Northwest’s BOI Reporting Service takes care of the hassle of federally mandated reporting for you, but we don’t sacrifice on your privacy. All information is removed from our databases after we’ve filed your report.
*This is informational commentary, not advice. This information is intended strictly for informational purposes and does not constitute legal advice or a substitute for legal counsel. This information is not intended to create, nor does your receipt, viewing, or use of it constitute, an attorney-client relationship. More information is available in our Terms of Service.
