Nonprofit Resources
Treasury Narrows Beneficial Ownership Reporting Requirement to Foreign Entities
Many nonprofit entities have had questions about whether they are required to report information about their beneficial owners to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) in certain situations. While nonprofit entities have always been exempt from this filing requirement, an interim final rule that went into effect on March 26, 2025, has narrowed the requirement to apply only to foreign entities, and not to U.S. companies or U.S. individuals.
A Look at What’s Changed
In 2021, Congress enacted the Corporate Transparency Act (CTA) with the goal of reducing illegal activity such as money laundering, tax fraud, and terrorism financing by requiring the reporting of more ownership information from certain U.S. businesses. This makes it harder for bad actors to hide income and other types of gains through shell companies or other opaque ownership structures.
Under the CTA, entities that meet specific criteria must submit a Beneficial Ownership Information (BOI) report to FinCEN. “Beneficial owners” are those individuals who exercise substantial control, either directly or indirectly, over a reporting company, or who own or control at least 25% of a reporting company’s ownership interests.
The interim final rule issued in March 2025 changed the definition of a reporting company to include only entities formed under the law of a foreign country that have registered to do business in any U.S. state or tribal jurisdiction. These entities must report BOI unless they qualify for one of the 23 exemptions listed in Section 1.2 of the FinCEN Small Entity Compliance Guide.
Under the interim final rule:
- Domestic (U.S.) entities — including nonprofit entities — are exempt from the BOI reporting requirements.
- Foreign entities registered to do business in the U.S. are exempt from reporting BOI for any U.S. persons.
- S. persons are not required to report BOI for any foreign entities in which they hold ownership.
- Foreign pooled investment vehicles where no non-U.S. person exercises substantial control are not required to report BOI.
The new rule focuses on foreign entities and foreign individuals, relieving the requirements for domestic entities and persons.
Please contact us if you have questions about BOI reporting or other issues for tax-exempt entities. We are here to help.
Ted R. Batson, Jr.
Ted serves as partner, tax counsel, and Professional Practice Leader – Tax. As a certified public accountant and tax counsel, Ted advises exempt organizations of all sizes on a wide range of issues. This includes consulting on tax and employee benefit related matters, representation before state and federal tax authorities, and assistance with firm audit or advisory engagements to formulate advice and counsel on important operating and tax issues. Ted also leads the firm’s tax preparation practice, including IRS Forms 990 and 990-T and related state forms. Note: Although licensed to practice law in Indiana, Ted's services through CapinCrouse do not involve the practice of law and consequently do not result in the creation of an attorney-client relationship.