Article
Corporate transparency act reporting for not-for-profits
March 17, 2024 · Authored by Patty Mayer
The Corporate Transparency Act (CTA) was enacted by Congress in 2021 as part of the National Defense Authorization Act. It provides transparency into business entity structures with the goal of combatting money laundering, corruption, and other illicit activities that can be committed anonymously through corporate structures.
The CTA went into effect Jan. 1, 2024.
General CTA reporting requirements
The CTA includes reporting requirements for beneficial ownership information (BOI) for individuals who own 25% or more of a company or who exercise substantial control over the entity.
Companies subject to the requirements must file an initial report with the Financial Crimes Enforcement Network (FinCEN) according to timelines outlined below and must report any changes to a previously filed report within 30 days of the change.
BOI reporting requirements for not-for-profits
Domestic and foreign entities that have filed formation or registration documents with a U.S. state or Tribe are subject to the reporting requirements unless they meet one of the exceptions outlined by FinCEN.
Per their Frequently Asked Questions (FAQs), not-for-profit organizations are exempt from the new reporting requirement for:
- IRS-designated section 501(c) organizations with a tax exemption determination letter from the IRS
- Political organizations defined by Internal Revenue Code (IRC) Section 527(e)(1) and exempt from tax under Section 527(a)
- Charitable trusts described in IRC Section 4947(a) paragraph one or two.
- Entities operating exclusively to provide financial assistance to or hold governance rights over any of the above not-for-profit organizations
- Wholly owned subsidiary of any of the not-for-profit organizations listed above
Required reporting
Although the new exemption rules are favorable for the not-for-profit sector, organizations should know when they’re subject to the reporting requirements, such as the following.
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.