The American Institute of Certified Public Accountants (AICPA) urged the Treasury Department and the Financial Crimes Enforcement Network (FinCEN) to delay enforcement actions relating to new beneficial ownership information (BOI) reporting requirements until after relevant pending litigation is resolved.
The AICPA was joined by state CPA societies in an April 3 letter to Treasury Secretary Janet Yellen and FinCEN Director Andrea Gacki elevating "grave concerns" with a provision of the Corporate Transparency Act (CTA) that created recordkeeping and report filing obligations for businesses to disclose information about their beneficial owners and company applicants.
Per a FinCEN BOI , the rules were put in place for national security purposes and are intended to prevent "illicit actors" from hiding assets or laundering money.
Effective January 1, 2024, businesses must supply names, birthdates, addresses, and unique identifying numbers and corresponding issuing jurisdictions. Existing companies have one year to file their initial reports, while newly registered entities have 30 days (unless the company is registered in 2024, in which case the deadline is 90 days).
That extra time for 2024 came from a FinCEN rule proposed last September. The AICPA previously recommended a more extensive grace period.
"To have a meaningful impact on small businesses, we recommend that FinCEN extend the deadline beyond the proposed 90 days to one year," the CPAs wrote in October . "Additionally, the scope of the proposed rulemaking should be expanded to include not only new entities created in 2024, but all entities created thereafter and entities making updates or corrections to their original filings."
The organization's latest letter comes on the heels of a recent ruling by the US District Court for the Northern District of Alabama in National Small Business Association v. Yellen (No. 5:22-CV-1448-LCB, 2024 WL 899372 ), where the court in a memorandum opinion issued March 1 found the CTA to be unconstitutional because it exceeds Congress' authority. The court's final judgment enjoined the federal agencies from enforcing the CTA, but only against the named plaintiffs, the NSBA.
On March 11, the Justice Department filed its appeal . "While this litigation is ongoing, FinCEN will continue to implement the [CTA] as required by Congress, while complying with the court's order," FinCEN said in a press release. "Other than the particular individuals and entities subject to the court's injunction … reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN's regulations."
According to the AICPA, the ruling has spurred confusion, with many entities believing they are no longer subject to the BOI requirements. With this in mind, the letter asked for the government to not issue civil or criminal penalties until one year after the matter's conclusion and not conduct any retroactive enforcement activities.
"The portal can remain open, and small businesses may voluntarily report BOI, but no small business should be compelled to file, nor should any small business face enforcement for failure to comply until after the courts have worked through this complex case," the AICPA said.
