Are Entities Assisting Tax-Exempt Entities Exempt from the CTA? 

There are 23 separate exemptions from the CTA's beneficial ownership reporting requirement. The exemptions are listed in order in FinCEN's Final Rule at 31 CFR 1010.380 and take effect on January 1, 2024.

CTA Exemptions Generally

In general, the CTA exempts companies that already report their beneficial ownership to the U.S. government under a separate legal framework. FinCEN's Final Rule addresses each exemption separately in subsection 1010.380(c)(2).

Exemption Number 20 - Entity assisting a tax-exempt entity

Subsection 1010.380(c)(2)(xx) of the Final Rule exempts:

(xx) Entity assisting a tax-exempt entity. Any entity that:

(A) Operates exclusively to provide financial assistance to, or hold governance rights over, any entity described in paragraph (c)(2)(xix) of this section;

(B) Is a United States person;

(C) Is beneficially owned or controlled exclusively by one or more United States persons that are United States citizens or lawfully admitted for permanent residence; and

(D) Derives at least a majority of its funding or revenue from one or more United States persons that are United States citizens or lawfully admitted for permanent residence.

This exemption has four prongs.

First, the entity must operate "exclusively" to provide financial assistance to, or hold governance rights over, an entity that is exempt under Section 1010.380(c)(2)(xix).

Second, the entity must be a "United States person."

Third, the entity must be beneficially owned or controlled persons that are either United States citizens or lawfully admitted for permanent residence.

Fourth, the entity must derive at least a majority of its funding or revenue from one or more United States persons that are either United States citizens or lawfully admitted for permanent residence.

FinCEN's discussion of this exemption in the Final Rule notes that the language of the exemption tracks the language of the statute itself.