Category C. Reporting Company
Q. Are homeowners associations reporting companies?
A. It depends. Homeowners associations (HOAs) can take different forms. As with any entity, if an HOA was not created by the filing of a document with a secretary of state or similar office, then it is not a domestic reporting company. An incorporated HOA or other HOA that was created by such a filing also may qualify for an exemption from the reporting requirements. For example, HOAs recognized by the IRS as section 501(c)(4) social welfare organizations (or that claim such status and meet the requirements) may qualify for the tax-exempt entity exemption. An incorporated HOA that is not a section 501(c)(4) organization, however, may fall within the reporting company definition and therefore be required to report BOI to FinCEN.
Q. Are entities formed under Tribal law required to report beneficial ownership information?
A. Yes, if the entity meets the reporting company definition and does not qualify for any exemptions to the reporting requirements.
While Indian Tribes have varying legal entity formation practices, some allow individuals to form legal entities such as corporations or LLCs under Tribal law by the filing of a document (such as Articles of Incorporation) with a Tribal office or agency whose routine functions include creating such entities pursuant to such filings. Tribal offices or agencies that perform this function may be called something other than a “secretary of state,” but they are performing a function similar to that of a typical secretary of state’s office. As a result, a legal entity created by a filing with such Tribal office or agency is a reporting company and is required to file beneficial ownership information with FinCEN, unless it qualifies for an exemption.
Note that, under the Corporate Transparency Act, a legal entity is a reporting company only if it is created or registered to do business “under the laws of a State or Indian Tribe.” Tribal corporations formed under federal law through the issuance of a charter of incorporation by the Secretary of the Interior—such as those created under section 3 of the Oklahoma Indian Welfare Act (25 U.S.C. 5203), or section 17 of the Indian Reorganization Act of 1934 (25 U.S.C. 5124)—are not created by the filing of a document with a secretary of state or similar office under the laws of an Indian tribe, and are therefore not reporting companies required to report beneficial ownership information to FinCEN.
Note also that “governmental authorities” are not required to report beneficial ownership information to FinCEN. For this purpose, a “governmental authority” is an entity that is (1) established under the laws of the United States, an Indian Tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States, and that (2) exercises governmental authority on behalf of the United States or any such Indian Tribe, State, or political subdivision. Thus, a Tribal entity that is such a “governmental authority” is not required to report beneficial ownership information to FinCEN. This category includes tribally chartered corporations and state-chartered Tribal entities, if those corporations or entities exercise governmental authority on a Tribe’s behalf.
Certain subsidiaries of governmental authorities are also exempt from the requirement to report beneficial ownership information to FinCEN. An entity qualifies for this exemption if its ownership interests are controlled (in their entirety) or wholly owned, directly or indirectly, by a governmental authority. Thus, for example, if a tribally chartered corporation (or state-chartered Tribal entity) exercises governmental authority on a Tribe’s behalf, and that tribally chartered corporation (or state-chartered Tribal entity) controls or wholly owns the ownership interests of another entity, then both the tribally chartered corporation (or state-chartered Tribal entity) and that subsidiary entity are exempt from the requirement to report beneficial ownership information to FinCEN.
Other exemptions to the reporting requirements, such as the exemption for “tax exempt entities,” may also apply to certain entities formed under Tribal law.
Category D. Beneficial Owner
Q. Who should an entity fully or partially owned by an Indian Tribe report as its beneficial owner(s)?
A. The answer depends in part on the nature of the entity owned by the Indian Tribe. This informs the determination on whether the entity is a reporting company that must report beneficial ownership information.
In general, a reporting company must report as beneficial owners all individuals who, directly or indirectly, exercise substantial control over the reporting company, and any individuals who directly or indirectly own or control at least 25 percent or more of the reporting company’s ownership interests.
An Indian Tribe is not an individual, and thus should not be reported as an entity’s beneficial owner, even if it exercises substantial control over an entity or owns or controls 25 percent or more of the entity’s ownership entities. However, entities in which Tribes have ownership interests may still have to report one or more individuals as beneficial owners in certain circumstances.
Entity Is a Tribal Governmental Authority. An entity is not a reporting company—and thus does not need to report beneficial ownership information at all—if it is a “governmental authority,” meaning an entity that is (1) established under the laws of the United States, an Indian Tribe, a State, or a political subdivision of a State, or under an interstate compact between two or more States, and that (2) exercises governmental authority on behalf of the United States or any such Indian Tribe, State, or political subdivision. This category includes tribally chartered corporations and state-chartered Tribal entities if those corporations or entities exercise governmental authority on a Tribe’s behalf.
Entity’s Ownership Interests Are Controlled or Wholly Owned by a Tribal Governmental Authority. A subsidiary of a Tribal governmental authority is likewise exempt from BOI reporting requirements if its ownership interests are entirely controlled or wholly owned by the Tribal governmental authority.
Entity Is Partially Owned by a Tribe (and Is Not Exempt). A non-exempt entity partially owned by an Indian Tribe should report as beneficial owners all individuals exercising substantial control over it, including individuals who are exercising substantial control on behalf of an Indian Tribe or its governmental authority. The entity should also report any individuals who directly or indirectly own or control at least 25 percent or more of ownership interests of the reporting company. (However, if any of these individuals owns or controls these ownership interests exclusively through an exempt entity or a combination of exempt entities, then the reporting company may report the name(s) of the exempt entity or entities in lieu of the individual beneficial owner.)
Category F. Reporting Requirements
Q. What are acceptable forms of identification that will meet the reporting requirement?
A. The Corporate Transparency Act (CTA) requires a unique identification number found in one of the following acceptable forms of identification for individuals:
- A non-expired U.S. driver’s license (including any driver’s license issued by a commonwealth, territory, or possession of the United States);
- A non-expired identification document issued by a U.S. state or local government, or Indian Tribe;
- A non-expired passport issued by the U.S. government; or
- A non-expired passport issued by a foreign government (permitted only when an individual does not have one of the other three forms of identification listed above).
Category L. Reporting Company Exemptions
Q. Are telecommunications services included in the public utility exemption to the reportingrequirements?
A. FinCEN’s regulations provide that an entity that is a regulated public utility as defined in 26 U.S.C. 7701(a)(33)(A) and that provides telecommunications services, electrical power, natural gas, or water and sewer services within the United States is not required to report its beneficial ownership information to FinCEN. Such exempt regulated public utilities include a corporation engaged in the furnishing or sale of telephone or telegraph services if the rates for such furnishing or sale meet the requirements of 26 U.S.C. 7701(a)(33)(A), as specified in 26 U.S.C. 7701(a)(33)(D).
Q. Does a company qualify for the large operating company exemption if it has not yet filed its Federal income tax or information return for the previous year?
A. The Corporate Transparency Act (CTA) specifies that a company may qualify for the large operating company exemption based on a Federal income tax or information return filed “in” the previous year, while FinCEN’s regulations refer to tax or information returns filed “for” the previous year. To the extent a tax or information return for the previous year was not filed in the previous year (e.g., because a company has not filed its return for the previous year at the time beneficial ownership information is required to be reported, or because the return filed in the previous year was for a prior year), a company should use the return filed in the previous year for purposes of determining its qualification for the exemption. If a company relying on this exemption subsequently files a tax return demonstrating less than $5 million in gross sales or receipts, and it no longer qualifies for the large operating company exemption or any other exemption, it has 30 days from the date of the tax return to file an initial BOI report. The Federal income tax or information return must demonstrate more than $5,000,000 in gross receipts or sales, as reported as gross receipts or sales (net of returns and allowances) on the entity’s IRS Form 1120, consolidated IRS Form 1120, IRS Form 1120-S, IRS Form 1065, or other applicable IRS form, excluding gross receipts or sales from sources outside the United States, as determined under Federal income tax principles.
Learn more
For more information about BOI reporting under the CTA, visit our resource page where you can sign-up for CTA updates. Learn about CT Corporations Beneficial Ownership Information solution to help you meet the CTA requirements.
