BENEFICAL OWNERSHIP INFORMATION (BOI) – TAX PROFESSIONAL RESPONSIBILITY?
The upcoming requirement to report the BOI to FinCEN is schedule to go into effect on January 1, 2024. The information to be provided includes the name, birth date, address, and copy of a government issued photo I.D. (drivers license/passport) for every direct or indirect owner of the eligible entity. The CTA defines a beneficial owner as “any individual who, directly or indirectly, either exercises substantial control over such reporting company or owns or controls at least 25 percent of the ownership interests of such reporting company.”
The discussion has arisen as to whether this is the responsibility of the tax professional. In a January 2023 article on the CTA, Forbes contributor Matthew Erskine noted: “Although FinCEN has dismissed the time and cost of collecting, confirming and filing the information, saying that the compliance cost is as little as $85, the quite substantial penalties for failure to comply ($500 a day up to $10,000, and up to 2 years in jail) makes it likely that business owners will use lawyers or accountants to file this information and keep it current, at a much higher rate than FinCEN anticipates.” Erskin recommended that business owners start looking for professional advisors who were learning about the new regulations and whose offices were preparing for the additional workload.
For existing companies, the requirement to file an initial report is by January 1, 2025. Afterwards, the business entity will have to report any changes to the business entity or of the beneficial owners within 30 days or be subject to the penalties.
New companies formed after December 31, 2023 will have 30 days to file their initial BOI report and then 30 days to report any changes to BOI or the business entity.
The tax professional cannot rely on the annual filing of the tax return or FinCEN report as changes that occur throughout the year have a 30-day reporting deadline.
Whether you elect to provide this as a service to your clients is an individual choice. Since the potential penalties can be substantial check with your E&O insurance carrier as to your protection in this area.
