The CTA applies to a wide range of corporations, limited liability companies (LLCs), and other similar entities that meet the following criteria:

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1. Domestic Companies

• Any entity created by filing a document with a state or tribal authority.

• Includes corporations, LLCs, and other similar business entities formed under U.S. state or tribal law.

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2. Foreign Companies

• Foreign entities that are registered to do business in the U.S. by filing a document with a state or tribal authority.

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Entities Considered “Similar Business Entities”

Although the CTA specifically mentions corporations and LLCs, the term "similar entities" may also encompass:

• Limited partnerships.

• Business trusts (or statutory trusts).

• Any other entity that requires state or tribal registration.

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Exemptions to the Reporting Requirements

Certain entities are exempt from BOI reporting because they are already subject to significant federal and state oversight. These include:

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a. Large Operating Companies

• Companies with:

  • More than 20 full-time employees.

  • Over $5 million in gross receipts or sales.

  • A physical office in the United States.

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b. Government-Regulated Entities

Entities already heavily regulated by government agencies are exempt. Examples include:

• Publicly traded companies (regulated by the SEC).

• Banks and credit unions.

• Insurance companies.

• Investment companies and advisers (regulated under the Investment Company Act).

• Broker-dealers.

• Money services businesses.

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c. Charitable and Nonprofit Organizations

• Nonprofits such as 501(c)(3) organizations are exempt, as their ownership and financial information are already publicly disclosed through IRS filings.

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d. Inactive Entities

• Entities that:

  • Were in existence before January 1, 2020.

  • Have no active business operations.

  • Do not own or control significant assets.

  • Have not changed ownership or sent/received funds in the last year.

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Key Determining Factors

Entities must determine if they fall under CTA requirements based on:

1. Entity Type: Corporations, LLCs, and registered foreign companies are prime targets.

2. Ownership Structure: The law targets entities with significant owners (those holding 25% or more of the company) or those with substantial control (e.g., executive officers or directors).

3. Exemptions: Companies meeting exemption criteria must document their status to ensure compliance.

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Why Compliance is Critical

Even exempt entities must be able to prove their exemption status if requested by FinCEN. For those required to comply, failure to file accurate and timely reports can result in significant penalties, including fines and imprisonment.

Businesses are advised to seek professional assistance to navigate these requirements, ensure accurate reporting, and avoid penalties.

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