Overview
As reported in an earlier post, beginning on January 1, 2024, certain U.S. companies will be required to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Department of the Treasury. It is estimated around 32 million small businesses will be impacted. Leading up to this new requirement was the 2021 passage of the Corporate Transparency Act (CTA). This act, intended to prevent illicit funds laundering through anonymous companies in the United States, addresses the concerns and challenges associated with shell companies.
According to FinCEN’s BOI FAQS page, companies required to report are called reporting companies. A reporting company is a limited liability company (LLC) or one that was created in the United States by filing a document with a secretary of state or similar office or Indian tribe; or a foreign company and was registered to do business in any U.S. state or Indian tribe. Existing companies created or registered to do business in the United States before January 1, 2024 must file by January 1, 2025.
New and Updated FAQs Have Been Issued
As reported by Wolters Kluwer, 17 new FAQs were issued and 8 pre-existing FAQs were updated in early October to provide further guidance on filing BOI reports. A new fact to note in regards to third-party service providers states there is “nothing in the Corporate Transparency Act or FinCEN’s regulations that prevents a third-party service provider who is not an attorney from submitting a reporting company’s beneficial ownership information (if authorized by the company to do so) or otherwise assisting a reporting company with preparing or submitting a BOI report.”
Further clarification of a pre-existing FAQ states: “a reporting company is not required to use an attorney, certified public accountant, enrolled agent, or other service provider to submit beneficial ownership information to FinCEN” and “FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued.”
Increased Outreach Efforts
In addition, according to the Journal of Accountancy, FinCEN has increased outreach efforts focusing on beneficial ownership conferences, webinars, roundtables, and informational sessions through partnerships with government agencies, industry groups, chambers of commerce, and others entities. There are, however, concerns about these efforts. “Over halfway through 2024, just 2.7 million of the 32.6 million businesses estimated to be required to file BOI reports this year have done so.”
Image by aymane jdidi from Pixabay
