An excepted inter-affiliate FFI (Foreign Financial Institution) is a foreign entity that is considered to be in reporting status with the Internal Revenue Service (IRS) under certain conditions. Specifically, an excepted inter-affiliate FFI is a foreign entity that is a member of a controlled group with a US member and is exempt from reporting under FATCA (Foreign Account Tax Compliance Act) because it is deemed to have a substantial presence in the United States. On the other hand, a sponsored direct reporting NFFE (Non-Financial Foreign Entity) is a foreign entity that is required to report under FATCA even if it is not a financial institution. A sponsored direct reporting NFFE is sponsored by a withholding agent, which is typically a US entity or a foreign financial institution that is subject to FATCA. The key difference between the two is that an excepted inter-affiliate FFI is exempt from reporting under FATCA, while a sponsored direct reporting NFFE is required to report.