The American Institute of CPAs (AICPA) and over 50 affiliated CPA organizations are calling on Treasury’s Financial Crimes Enforcement Network (FinCEN) to delay a beneficial ownership information (BOI) reporting rule starting in 2024. The AICPA-led coalition consisting of over 50 state CPA societies and associations, including Washington, D.C. and Guam, stated in an October 30 letter that most businesses are in the dark about the BOI reporting rule’s existence and that the rule as currently drafted would significantly punish even the slightest misunderstanding of the reporting requirements.
Small Business Burdens
The controversial final rule issued by FinCEN on September 30, 2022, implements Section 6403 of the Corporate Transparency Act (CTA) (P.L. 116-283), an anti-money laundering law aimed at those seeking to conceal their ownership of corporations, LLCs, or other entities in the U.S. to facilitate money laundering, tax fraud, and other illegal acts. It’s small businesses and unsuspecting employees, however, that are expected to feel the brunt of the reporting burden.
Under the final rule, reporting companies created or registered before January 1, 2024, will have one year (until January 1, 2025) to file their initial reports, while reporting companies created or registered after January 1, 2024, will have 30 days to file their initial reports after receiving notice of their creation or registration. However, FinCEN on September 30, 2023, issued proposed regulations to extend the deadline for certain entities to file their initial BOI reports. Under the amendment to FinCEN’s BOI Reporting Rule, it is now providing 90 days for reporting companies created or registered in 2024 to file their initial reports, instead of 30 days.
Entities identified as willfully not complying with the BOI reporting requirements face significant civil and criminal penalties. Civil penalties are assessed at $500 per day for as long as a violation exists and up to $10,000, and criminal penalties could include up to two years in prison.
The AICPA-led coalition is recommending that FinCEN extend the deadline beyond the proposed 90 days to one year to have the most meaningful impact on small businesses. Additionally, it is recommending that the scope of the proposed rule be expanded to include not only new entities created in 2024 but all entities created thereafter as well as entities amending their original filings.
“FinCEN has woefully underestimated that there will be 32,800,422 burden hours for entities to complete the filing in the first year (approximately 1 hour per entity) with an estimated cost of up to $2,614.87 per entity depending on their structure,” the coalition wrote. “When a reportable change occurs, including something as simple as an expired driver’s license, business owners usually have many activities to undertake, making the 30-day BOI reporting timeframe particularly difficult to comply with.”
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