Exemptions for Beneficial Ownership Information Reporting

The Internal Revenue Service (IRS) has outlined several exemptions for entities that are required to report beneficial ownership information. In this article, we will highlight four of these exemptions.

Exemption #19: Entity Assisting a Tax-Exempt Entity

An entity qualifies for this exemption if it operates exclusively to provide financial assistance or hold governance rights over a tax-exempt entity. Additionally, the entity must be:

• A United States person
• Beneficially owned and controlled by one or more United States persons
• Derive at least a majority of its funding or revenue from such persons

Exemption #21: Large Operating Company

An entity qualifies for this exemption if it:

• Employs over 20 full-time employees
• Has an operating presence in the United States
• Filed a federal income tax return demonstrating:
  • Gross receipts or sales exceeding $5 million
  • Reported this amount on its tax return
• Has a physical office in the United States and regularly conducts business at that location

Exemption #22: Subsidiary of Certain Exempt Entities

An entity qualifies for this exemption if it is owned or controlled by one of the following types of exempt entities:

• Securities reporting issuers
• Governmental authorities
• Banks
• Credit unions
• Depository institution holding companies
• Other similar institutions

What Does This Mean for You?

These exemptions can provide relief for certain entities that are required to report beneficial ownership information. By understanding these exemptions, individuals and businesses can better navigate the complex requirements of beneficial ownership reporting.

Note: These summaries aim to provide a concise overview of each exemption while maintaining the original language and structure.