With Beneficial Ownership Information (BOI) reporting requirements now effective under the Corporate Transparency Act (CTA), Wolters Kluwer CT Corporation is addressing numerous inquiries from businesses and individuals regarding exemptions for “large operating companies.” CT Corporation’s online BOI resources aim to enhance understanding of these reporting obligations.
“There is an exemption for subsidiaries of certain exempt entities—including those of large operating companies—if their ownership interests are controlled or wholly owned, directly or indirectly, by a large operating company.”
Wolters Kluwer has published a white paper and created a podcast to clarify when organizations are exempt from the new BOI reporting requirements and what this means for their subsidiaries.
Catherine Wolfe, Executive Vice President and General Manager for CT Corporation, highlights the complexities in determining eligibility for a large operating company exemption and the eligibility of its subsidiaries. Exempt entities do not need to file a BOI report with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).
“Determining whether an organization is exempt from reporting requirements starts with three major factors; however, the eligibility calculation becomes more complex if subsidiaries are involved,” says Wolfe.
A large operating company must:
- Employ more than 20 full-time employees in the U.S.
- Have an operating presence at a physical office in the U.S.
- Have grossed more than $5 million in receipts or sales from U.S. sources, as reported in the prior year’s federal tax filing.
“Entities that qualify for the large operating company exemption do not need to apply for that status nor file a BOI report,” Wolfe notes. “Subsidiaries of certain exempt entities, including those of large operating companies, qualify for an exemption if their ownership interests are controlled or wholly owned, directly or indirectly, by a large operating company.”
FinCEN specifies that a subsidiary’s ownership interests must be 100 percent owned or controlled by an exempt entity to qualify: “If an exempt entity controls some but not all of the subsidiary’s ownership interests, the subsidiary does not qualify.”
CT Corporation provides comprehensive BOI solutions to help even the largest and most complex organizations meet their obligations. CT’s Beneficial Ownership Platform securely stores and retains BOI filing information, streamlining multiple entity filings and amendments. For large-scale operations, CT is an authorized API participant for FinCEN, enabling the compliant, secure upload of thousands of filings in real time.
