✅ Most Nonprofits Are Exempt

Organizations described in Section 501(c) of the Internal Revenue Code and exempt from taxation under Section 501(a) are generally exempt from CTA beneficial ownership reporting requirements. This exemption remains valid even with the recent CTA enforcement suspension for U.S. companies.

🔍 Quick Nonprofit Exemption Checker

✅ EXEMPT

  • 501(c)(3) Charities
  • 501(c)(4) Social welfare orgs
  • 501(c)(5) Labor unions
  • 501(c)(6) Business leagues
  • Other 501(c) organizations
  • Charitable trusts

⚠️ EXCEPTIONS

  • Newly formed (before IRS approval)
  • Lost tax-exempt status
  • Mixed ownership entities
  • HOAs under Section 528
  • Foreign nonprofits

Important Exceptions to Know

1. Newly Formed Nonprofits

Issue: An entity becomes 501(c) exempt only after IRS approval of Form 1023.

Impact: Until you receive your determination letter, you're not CTA exempt and may need to file. However, with the current CTA enforcement hold for U.S. companies, newly formed nonprofits have additional time to obtain their exemption status.

Timeline: Most Form 1023 applications take longer than 90 days, so new nonprofits typically must file initially.

2. Lost Tax-Exempt Status

Issue: Nonprofits that lose their tax-exempt status become subject to CTA.

Grace Period: 180-day exemption period starts from the date of status loss or revocation.

Action Required: Must file CTA report if status isn't restored within 180 days.

3. Mixed Ownership Entities

Issue: If nonprofit doesn't own 100% of a subsidiary.

Example: Nonprofit owns 50%, private entity owns 50%.

Result: The subsidiary entity (not the nonprofit) must file CTA reports.

4. HOAs Under Section 528

Exempt: HOAs under Section 501(c)(4)

Not Exempt: HOAs under Section 528 (homeowner associations, condo associations, timeshares)

Requirement: Section 528 HOAs must file annual CTA reports.

What Information Would Be Required?

If your nonprofit isn't exempt, you'd need to report:

  • Organization's legal name and trade names
  • Business address
  • State of incorporation
  • EIN or other identifying number
  • Information about beneficial owners (those with 25%+ ownership or substantial control)

Steps to Take

  1. Verify Your Status: Confirm your 501(c) designation with the IRS
  2. Check Subsidiaries: Review any entities your nonprofit owns or partially owns
  3. Document Exemption: Keep records of your tax-exempt status
  4. Monitor Changes: Watch for any changes to your exempt status
  5. Consult Legal Counsel: Get professional advice for complex ownership structures