What is a Reporting Company?
Under the CTA, a reporting company is defined as an entity that needs to file its BOI report with FinCEN. On March 26, 2025, the definition underwent a significant change:
- Current Definition: A reporting company is an entity that is created or organized under the law of a foreign country and which is registered to do business in the United States by filing a document with a Secretary of State or similar office (for example, foreign LLCs filing a certificate of authority in a U.S. state).
- Former Definition: The earlier definition was an entity formed under the laws of the respective state (such as a U.S. corporation or LLC formed by filing articles of incorporation or organization) and any foreign entity registered in the United States.
The interim rule of March 2025 exempted all U.S.-formed entities from BOI reporting and significantly restricted the scope of application.
Criteria for Being a Reporting Company
Creation or Registration by Filing:
- An entity becomes a reporting company if it is a foreign entity registered to do business in the U.S. by filing a document (e.g., certificate of authority) with a secretary of state, state corporations commission, or tribal office.
- Example: A German corporation registering in Texas to operate locally.
Entities Formed Without Filing:
Entities not requiring formal filing with a government authority are excluded. Examples include:
- Sole Proprietorships: Unincorporated businesses owned by one individual.
- General Partnerships: Often formed without state filings unless using a fictitious name.
- Unincorporated Associations: Groups lacking formal legal status.
Exemptions
Even before the March 2025 rule change, the CTA outlined 23 exemptions for entities not required to file BOI reports, many of which remain relevant for understanding the broader context. These exemptions still apply to foreign entities assessing their status, though U.S. entities are now universally exempt.
Key exemptions include:
- Large Operating Companies: Entities with more than 20 full-time U.S. employees, a physical U.S. office, and over $5 million in gross receipts or sales reported on a prior-year federal tax return.
- Publicly Traded Companies: Entities registered under the Securities Exchange Act of 1934.
- Tax-Exempt Entities: Organizations under IRC Section 501(c), political organizations under 527(e)(1), or certain trusts under 4947(a).
- Regulated Entities: Banks, credit unions, insurance companies, and others subject to existing federal or state oversight that already report ownership data.
- Inactive Entities: Entities in existence before January 1, 2020, that are not engaged in active business, hold no assets, and have not sent/received funds exceeding $1,000 in the past 12 months.
Foreign entities must evaluate these exemptions to determine if they are relieved from reporting, though the bar is higher now that domestic entities are categorically excluded.