Okay, this is part two of the Beneficial Ownership Information Reporting Forms
and in this one I'm just talking about the exemptions to it.
So these, if you qualify under one of these exemptions,
you do not need to file the format.
I mentioned in the last episode, that's the BOI form,
that's where you get a file every year. You get a file for new
businesses or file it for business changes and I'm
going to go through these 23 exemptions which will apply to a lot of
people maybe collectively but most of the people listening to this it will probably
not apply to you and and I'll maybe I'll talk through some of these
these things here but so this the first exemption and there's 20 three
of them total and I'm not going to go into a ton of depth
but you'll get the you'll get the point pretty quickly so the first one
is you do not need to file this bi form if you are a
securities reporting issuer so this is like an entity that issues securities under
the SEC they're the Securities Exchange Act of 1934 so
if you're one of those you don't need to file if you are a
government like a governmental authority you don't need to file the BOI form
as if you're under US US law or state law and you
have government authority likely won't apply to most it's not going to apply to
business owners and LLC and corporation owners you are a bank this
does not apply to you might apply to some of you but you have
that exemption you do not need to file you do not need to file
the BOI if under federal banking laws you're considered a bank and
number four if you're a credit union similar to a bank right but not
a lot not going to apply to a lot of people and you don't
need to file the BOI form and really the reason I think for a
lot of these it's because they already had the government already has the information
or there's like either is with the owners or the ownership structure is not
really individuals and having foreign corporations and foreign people own
these is is very or not as likely and so under
these requirements and exemptions they're just thinking they don't need that additional
filing information. Okay. The number five,
if you're a depository institution.
So another kind of along the same line of banks.
And number six, if you are a money services business is going to be
businesses that are registered already. With FinCEN and that's the,
the FinCEN is the like the government agency that's collecting this information.
If you're already registered with them as a money service business,
you are going to be exempt from filing the BOI.
Number seven, if you're a broker or a dealer in securities and securities,
these are like a red, actual red broker,
actual dealer as defined in the Securities Act of 1934.
Not a lot of people will qualify for that. And then number eight is
if you're a securities exchange or clearing agency,
and when we say securities, this is like stock market,
stock exchange, that's what I'm meaning by securities,
that's what they put in the exemptions. Okay,
then number nine is if you're an other exchange,
other exchange act registered entity.
So still along the line of securities and stocks,
public companies, if you're a registered agent.
See, you're a registered entity for that.
You're likely not needing to file the BOI. Okay.
Then number 10, if you're an investment company or investment advisor,
I think this, this is going to be, it's going to be one of
those things. Like with a lot of, like I do it a lot with
the tax code that's not black and white,
it's a pretty big gray area. So if you have an investment company,
like we're going to need to dig into the exact definition of what that
means, but an investment advisor. Like if you're
like a financial advisor, investment advisor, and you have a company set up for
that, you might not need to do that. But it's,
this is specifically for companies that are registered with the SEC.
With the SEC as an investment company or an advisor to be exempt.
So it's like my investment company that owns my real estate,
that's not an investment company for this exemption.
I wish it was, but that's not going to be an exempt company.
It's because it's not registered. Okay, the number 11 is the venture capital fund
advisor. This is,
again, you need to be registered with the SEC as a venture capital fund
advisor, not just if you just put a label on yourself and say,
I'm in venture capital and I'm raising funds. It's not like that.
It's, you can label yourself that way, but as you need to be registered
with the SEC to have that exemption. Number 12,
an insurance company, an insurance company is exempt.
And then I'm going to actually tell you number 13,
if you're a state licensed insurance producer,
you're also exempt. So the insurance company of course asks the people that's
who is receiving the, like the premiums and actually providing the insurance coverage.
So not for an insurance salesman or insurance agent,
but if you're a producer or an agent for sale for insurance,
you could be exempt from that.
And you need, you need to be in the United States for all of
these. These are US based companies for the exemption.
And number 14, a commodity exchange act registered entity.
So if you were registered with the commodity exchange act,
you're going to be exempt. Number 15. I love this one.
This is the accounting firms, a public accounting firms that
are registered under the Sarbanes acts the oct of 2000.
This is going to be like the large accounting firms.
This isn't a tax preparation firm. This isn't CPA firms.
These are public accounting firms that are doing public audits and they have additional
registrations and like. Typical smaller or even medium sized accounting firm if
they're not doing those public company audits. So it's not going to be all
accounting firms, probably not my accounting firm.
We don't do public company audits like of the the publicly.
Traded companies, it's going to be those very large accounting firms.
So then number 16, an exemption is the public utility,
like a public utility company Corporation LLC.
These are like, they're not real.
They're not all governed. Of course, there are water companies and power companies that
are not government, but you are going to be exempt.
If you are a public company or a public utility company,
then number 17, a finite financial market utility.
So this is, these are utilities that are designated by the Financial
Stability Oversight Council.
So it's not going to be a lot of companies, but if you're a
part of that council, you're going to be a part of it. You're going
to know if you're established under
that. And number 19,
if you're a tax examiner. So this is for nonprofit organizations and
like, you think, whether it's,
whether it's, you know, your own nonprofit organization or churches,
charities, those are taxes. And they'll also be taxed,
they'll also be exempt from filing this BOI form,
which is, which is great. I think, honestly,
I think reducing the burden, the administrative burden,
burden on the tax exempt entities,
the charities. The nonprofits, I think that's a great idea.
The number 20, if you're an entity assisting a tax exempt entity,
then you could also be exempt. But this,
this is, this is one of those. And when this stuff comes out,
there's not a ton of information on it yet. So what exactly qualifies?
This is kind of the way my brain thinks. And maybe some other people,
it's like, okay, who is an entity assisting a tax exempt entity.
Great. That sounds good. But is it any service provider?
Any vendor? Are they assisting them?
What if they are a vendor and they're getting paid for it?
Like, when does that actually apply? That's, that's one of those.
That, that's a question mark, in my opinion right now.
I don't expect it's going to be all vendors of tax exempt entities,
but companies that are supporting other tax exempt entities
are there's some sort of exemption there.
We'll have to dig into it. And this next one this is number 21.
If you are a large operating company,
so this is if you have more than five million dollars of gross receipt.
And you have a physical presence,
like an actual physical presence in the United States,
then you can qualify for an exemption, but you need five million dollars of
gross exempt of gross receipts and whether it's.
Tested over a two or three year average or it's just the prior year.
I'd expect it's just the prior year. We're going to get some more information
on that. But if you have more than five million dollars gross receipts,
you might not even need to file that BOI form. And I think the
government rationale for that is like, okay,
there's five million dollars. Five million dollars is harder to hide than smaller amounts.
If you had that much in gross receipts, there's going to be potentially 1099s
or owners that receive K1s. There's going to be cash that's reported.
From banks, like it's just like,
it's just going to be easier to track.
Maybe I don't, we don't know. We don't know why we don't have any
rationale behind these exemptions. We've just got the exemption list.
And in 22. Is if you're a subsidiary of certain exempt entities.
This is one of the biggest ones.
Like it's 2022 or this number 22,
but this is like if you've done tax planning.
Or you've done structuring and you're planning out your wealth and investments.
You likely have corporations and LLCs,
potentially multiple LLCs and you have LLCs that own other LLCs or holding companies
that own other LLCs.
Like. If you listen to any of my stuff, that's, that's what I recommend.
There's, there's asset protection reasons for that,
legal, liability, legal and liability reasons for it.
There's tax reasons for it. But it,
this is huge because say you have 10. 10 entities,
you have one holding company, and imagine that this one LLC partnership you have
owns nine other LLCs. If it owns nine other LLCs,
would you need to file a BOI form for each of those LLCs?
I'm not. I'm not expecting that you will as long as they're all owned
by that one company. If there's more than one owner,
then it's a partnership, it's a standalone entity,
then that one probably does need to, but if it's directly owned and 100%
owned by another company, then it's a partnership. As a wholly owned subsidiary,
I don't expect you need to file. It specifically says it here and some
of the other reading material I've read, it mentions that it doesn't,
you do not need to file. So, I think that's it. That's huge.
That could be, that could get very expensive and that could get time consuming
for people. Even though it's a simple form, but if you do a simple
form 10 or 20 times for all your LLCs,
it'd be a pain. So, that's a great.
A great exemption in my opinion. And then the last exemption is an inactive
entity. This is entities in existence before 2020 and if they're
not actively engaged in business now and they don't have foreign ownership.
So they were open before 2020 and right now this
is like 2023, 2024. They're not actively engaged in business and
they're not owned by someone like a foreigner.
Like someone foreign to the United States, non-citizen.
So if you meet those three tests then you won't need a file or
if you're, yeah, if you were before 2020,
you're not doing business and not owned by a,
a foreign person, then you don't need a file.
It's just an old, inactive entity. I don't know how they're gonna be true.
I'm just guessing they're not even gonna ever expect any filing.
But as soon as you start doing business again, then you would need to
file. Okay, there's the 23 exemptions.
Covered quite a bit of it here. I like that 2022 or that 2022,
number 22, which is the, the subsidiaries not needing to file.
I think that's the best one in my opinion. And I'll keep you guys
updated on everything else. This new information comes out on this.