AICPA joins coalition to increase awareness of new BOI requirement
May 16, 2023
The AICPA has joined a coalition of organizations that will work to make taxpayers and tax professionals aware of the new beneficial ownership information (BOI) reporting requirement that applies to most companies created in or registered to do business in the United States.
The BOI reporting requirement is an anti-money-laundering initiative enacted through the Corporate Transparency Act in 2021 that mandates BOI be reported to the Financial Crimes Enforcement Network (FinCEN), starting Jan. 1, 2024.
"We are highly concerned that many business owners are unaware of this filing requirement. Small businesses are the backbone of our economy, and we want to ensure they understand their reporting obligations," said Melanie Lauridsen, director–Tax Practice & Ethics with the AICPA. "We have collaborated with the organizations represented to ensure we have the largest scope possible to reach millions of affected taxpayers. This coalition has come together because we all feel awareness is critically needed."
FinCEN describes a company's beneficial owners as the persons "who ultimately own or control the reporting companies." Disclosing information about them will "help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity, as well as protect national security," FinCEN said in its Notice of Proposed Rulemaking issued in December 2022.
As first stated in its September 2022 regulatory impact analysis, FinCEN said it is difficult to estimate the number of entities that are reporting companies. It assumes that all entities created or registered before the effective date of Jan. 1, 2024, that are subject to the BOI reporting requirement will submit their initial BOI reports in the first year — or 32.6 million entities. In 2025 and beyond, FinCEN estimates that almost 5 million initial BOI reports will be filed each year — the same estimate as the number of new entities per year that meet the definition of a reporting company and are not exempt. The total five-year average of expected BOI initial reports is 10,510,160.
FinCEN estimates about 6.6 million BOI reports will be filed in 2024, and about 14.5 million such reports will be filed annually in 2025 and beyond. The total five-year average of expected BOI update reports is almost 12.9 million.
The coalition includes the following organizations: AICPA, Latino Tax Pro, National Association of Black Accountants, National Association of Enrolled Agents, National Association of Tax Professionals, National Conference of CPA Practitioners, National Society of Accountants, National Society of Black Certified Public Accountants, National Society of Tax Professionals, Padgett Business Services, the Diverse Organization of Firms, H&R Block, and Prosperity Now.
The AICPA also submitted comments to FinCEN in February 2022, urging it to consider the burden and cost imposed by BOI reporting requirements affecting an estimated 25 million small businesses, including small CPA firms.
[Journal of Accountancy]