Home Health & Hospice Week

No taxes means no reporting.

Don’t assume you are off the hook for Corporate Transparency Act reporting, because you probably aren’t.

There are 23 types of entities exempt from reporting. These exemptions are generally for entities that already have significant government reporting requirements, such as:

•  Already highly regulated firms (e.g., banks, insurance companies and credit unions)
• Entities exempt from taxation under Section 501(c) of the Internal Revenue Code (e.g., charitable organizations, churches and religious organizations, private foundations, political organizations, and other nonprofits)
• Large companies with more than 20 employees and $5 million in annual revenue.
• Inactive or dormant companies, meaning the company is not holding any kind/type of assets; has not sent/received any funds greater than $1,000 directly or indirectly; was in existence on Jan. 1, 2020, and is not owned by a foreign person.

Caveat: This is a much more limited exception than the term “inactive” implies.

The CTA rule exempts five types of individuals from the definition of “beneficial owner” including for example, a minor child, custodian or creditor.

The reporting company does not have to report an exempt individual as a beneficial owner. See Chapter 2.4 of FinCEN’s Small Entity Compliance Guide for a checklist to help determine whether any exceptions apply.