The Corporate Transparency Act was enacted as part of the National Defense Act for Fiscal Year 2021. The CTA mandates that millions of entities report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
Per FinCEN: "A final rule implementing the beneficial ownership information reporting requirements of the Corporate Transparency Act (CTA) was issued in September 2022. These regulations go into effect on Jan. 1, 2024. Beneficial ownership information will not be accepted prior to Jan. 1, 2024."
The American Institute of CPAs (AICPA) joined a coalition of organizations who have come together to make taxpayers and practitioners aware of the new BOI reporting requirement. BOI is an anti-money laundering initiative enacted through the CTA, which aimed "to help prevent criminals, terrorists, proliferators, and corrupt oligarchs from hiding illicit money or other property in the United States."
It is estimated that there will be 32.6 million filings in 2024, and 5-6 million filings each year thereafter, with the potential for steep penalties for the taxpayer.
“There is concern that many business owners are unaware of this filing requirement,” said FICPA President & CEO Shelly Weir. “Many small businesses will be subject to this requirement and the goal is to inform them prior to the regulation start date of Jan. 1, 2024.”
The coalition mentioned above includes the AICPA, Latino Tax Pros, National Association of Black Accountants, Inc. (NABA), National Association of Enrolled Agents (NAEA), National Association of Tax Professionals (NATP), National Conference of CPA Practitioners (NCCPAP), National Society of Accountants (NSA), National Society of Black Certified Public Accountants, Inc. (NSBCPA), National Society of Tax Professionals (NSTP), Padgett Business Services, the Diverse Organization of Firms (DOF), H&R Block, Paychex, and Prosperity Now.
As FinCEN releases more information on this reporting requirement, the FICPA and AICPA will keep members updated on the issue. In the meantime, the coalition will continue to raise awareness and educate taxpayers of their filing obligations.