BOI question

[PATAX]

Just sitting here working as usual while listening to the static on the weak clock radio. A question crossed my weak mind. For existing clients, why doesn't the IRS ask the BOI questions directly on the annual income tax return, like the Forms 1120 and 1120S? They already ask many questions on there anyways, so why don't they just put the BOI questions right on there? Or is this too simple of a solution?

[IRonMaN · Accepted solution]

"Or is this too simple of a solution?"

Yes

[PATAX]

Thanks Iron Man. Hopefully we will be able to do this through our Intuit/Pro Series software. If not, then I guess we'll have to go on their website, or use a third party. If we have to go on their website then I hope they accept the id.me MFA. That's what I used for the new EFTPS, but apparently I also have a login.gov mfa account already set up from years ago. All of these changes, and for years there were no changes from year to year.

[IRonMaN]

These days, the life of a tax preparer is much more challenging than the life of a brain surgeon.😜

[PATAX]

There was news article I read somewhere that college students do not want to go into accounting anymore. I wonder why? Since many of us come from an accounting background, then there will obviously be even more of a shortage of tax preparers. I was talking with EA in the eastern part of the state, and she said there aren't as many tax preparers as there used to be, same here. The only good thing about that, is the law of supply and demand, and it's effect on our fees.

[BobKamman]

Because IRS and FinCen are two different branches of the Treasury Department.  FinCen is no more related to IRS than is the Bureau of Engraving and Printing.  It will be interesting to see, however, whether these filing requirements are delayed or repealed before the November 2024 elections, when small business owners will have been told how much closer Big Brother is watching.  " ‘Well, go pick up a Bible off your shelf and read it. That’s my worldview.” -- said Mike Johnson.  So maybe this relates to Herod tracking down the male babies in Bethlehem.  

[PATAX]

Why can't they make an exception and have the IRS collect that information on the return for FinCen?

[BobKamman]

That would involve appropriating money for IRS.  Definitely not allowed by the Bible.  

Also, a lot of entities that don't have to file tax returns (like temporarily inactive LLC's) still have to file FinCen reports.  

[PATAX]

They do not need more funds to ask a few more questions. They already ask on the corporate return if someone owns more than 50% of stock. Just expand the questions that's all. That can take care of all the corporate returns. Several years ago they drastically expanded the number of questions and so forth on the 990 returns.

[Just-Lisa-Now-]

I could have sworn I saw something about having to upload a photo ID as well for this BOI thing. 

Im savoring these last few weeks of freedom before needing to burden myself with new tax junk.

[PATAX]

I wouldn't be surprised in the future, that all government buildings require photo ID mfa if you have to use the bathroom.

[rbynaker]

I picked this thread because it was the most recent and easiest to find. 🙂

Someone posted this link in another tax group:

https://www.fincen.gov/boi-faqs

I've been generally of the opinion that accountants have no authority to file these.  We are granted limited authority to "practice law" in that Title 26 of the U.S. Code (commonly referred to as the Internal Revenue Code) is "law".  There is also a specific carve out for FBAR filings.  Beyond that, IMO this BOI is the practice of law.  If you scroll down on the link above to FAQ Section D you'll see this is ridiculously all-encompassing and, while some things are cut-and-dried, many of the terms are vague and poorly defined.  This might be easy enough for a SMLLC with no employees but get much beyond that and you're trying to figure out who might be an "important" decision-maker, regardless of actual/legal ownership.

[PATAX]

Thanks Rick. You raised some excellent points. There needs to be specific guidance issued as to whether this is a legal matter or a non-legal matter. Dan.

[sjrcpa]

And we're being told the legal issue is determined by each state.

[BobKamman]

But then, is it accounting malpractice not to advise the client of the requirement to file and the penalties for not doing so?  And then just send them down the street to the friendly neighborhood lawyer?  (Or tell them to figure out how to do it themselves.)  

And there is no federal definition of the practice of law.  Each state has its own.  Do real estate agents practice law? In Arizona, we had to amend the constitution to let them stay in business.  The same was not done for tax return preparation, although it could have been.  

[TaxGuyBill]

I admit that I haven't dug into the BOI stuff yet, so I could be completely off base, but just for discussion ...

I have read in the past that a tax preparer CAN fill out a state form to help the client register their LLC with the State.  We can't advise about such matters, but if the client want us to merely assist them by filling out a form, we are allowed to do it because it is not considered "practicing law".  How is BOI any different?

FBARs - Are we allowed to file them?  Isn't that similar to BOI - we are just reporting factual information and sending the form to the Treasury Department/FinCen?

As a side note, in my opinion tax preparers CAN "practice law" - tax law.  That is what we do.  Yes, we are limited to only tax law, but I don't see how our job wouldn't be considered as "practicing tax law".

[sjrcpa]

CPAs have a specific carve out for tax law. Also for FBARs which are under a different title.

There is no carve out for BOI. This is not Title 26.

[IRonMaN]

After reading through this post I was thinking, things could be worse:

[BobKamman]

Not being a member of that tribe -- where is this carve-out found?

[TaxGuyBill]

I guess I didn't realize there was a specific carve out that allows tax preparers to do FBAR.   Any idea where that is?

[sjrcpa]

I'll look - for both.

[TaxGuyBill]

---

@rbynaker wrote:

We are granted limited authority to "practice law" in that Title 26 of the U.S. Code (commonly referred to as the Internal Revenue Code) is "law".  There is also a specific carve out for FBAR filings.

---

Okay, I must be a total idiot.  🤣  I completely missed you comment when I started asking about practicing law and the FBAR.  You basically covered my thoughts and I completely missed it and repeated it.  😂

I guess I need to read better before commenting.  😀

[TaxGuyBill]

---

@sjrcpa wrote:

I'll look - for both.

---

Thanks.  I'll do some digging too.  I just never really thought much about it before, so it's a new thought to me.

[rbynaker]

---

@TaxGuyBill wrote:

---

@rbynaker wrote:

We are granted limited authority to "practice law" in that Title 26 of the U.S. Code (commonly referred to as the Internal Revenue Code) is "law".  There is also a specific carve out for FBAR filings.

---

Okay, I must be a total idiot.  🤣  I completely missed you comment when I started asking about practicing law and the FBAR.  You basically covered my thoughts and I completely missed it and repeated it.  😂

I guess I need to read better before commenting.  😀

---

No worries.  I'll see what I can find.  I admit, I'm just following advice from trusted sources and haven't actually researched it myself.  In the meantime, here's a risk alert issued a few weeks ago from the AICPA's affiliated insurance carrier:

https://www.cpai.com/Education-Resources/my-firm/Tax-Services/What-accounting-firms-need-to-know-abo...

The issue is that the unauthorized practice of law (UPL) is a state law issue.  So something that may be fine in MN could be illegal in FL.

[BobKamman]

That link includes this:  "Until states provide conclusive or actionable guidance on how or if a non-attorney may provide CTA services without violating UPL statutes, UPL will remain an important consideration."

I hope no one is expecting states to issue a news release that would count as "conclusive or actionable guidance."  Most UPL rules come from the state supreme courts, through the (quasi-public) state bar associations.  Their job is to decide cases, not give advice to members of other professions. 

I don't know what state Boards of Accountancy do.  They may have issued rules on what CPA's can do, but do any of them rely on a definition of practicing law?  I would think their job is to define practicing accountancy.  And whenever I see CPA's helping clients form LLC's, or file Tax Court petitions, I wonder what rules allow that.  

To be clear, there is nothing in Title 26 about the unauthorized practice of law.  Well, OK, by allowing CPA's and enrolled agents to represent clients at the administrative level, it seems to assume that states would not be concerned about whether that violates UPL rules.  And it does allow Tax Court to make its own rules of practice, which don't require representatives to be lawyers if they can pass a stiff exam instead.  

[PATAX]

@IRonMaN I wonder if orcas sunk that boat?🐋🛥

[IRonMaN]

I hear it was an ACME hull with an Intuit engine ------------------ what could go wrong?

[Taxes-by-Rocky]

And yes, the irony here is that you need to have an attorney tell you if you are engaged in the unauthorized practice of law.

Clearly, BOI will not have a place at the table this year.

[HOPE2]

Hi @TaxGuyBill if I do tax and have an S-corp should file BOI finally.

I saw in FinCen pdf FAQ some are exempt from BOI, like #15 Accounting firmhttps://www.fincen.gov/sites/default/files/shared/BOI_FAQs_Q&A_11.15.23_508C.pdf

Page 5 

[TaxGuyBill]

It depends on if your "Accounting Firm" is registered with the government.  See the 15th page of the PDF (page #9) of the full BOI booklet.

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf#pag...

Once you've identified the Beneficial Owners, I would think this entire process take less than five minutes.  I'm puzzled why everybody is so stressed about it.

Even if an entity falls under an exempt category, I don't see any harm in filing it anyways. 

[BobKamman]

Remember when Leona Helmsley said, "only little people pay taxes"?

Only big people are exempt from filing BOI reports.

Public accounting firm (Exemption #15)
An entity qualifies for this exemption if the following criterion applies:
1. The entity is a public accounting firm registered in
accordance with section 102 of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7212).
 Yes  No

https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide_FINAL_Sept_508C.pdf

Page 9

[PATAX]

Remember the Golden Rule: "He who has the gold, Rules."

[PATAX]

@TaxGuyBill in my opinion many people are stressed about this because it is unnecessary BS.  An Old Timer who was active in politics, the Democrat Party that is, told me many years ago not to believe in everything that they tell you, because sometimes there is the "official reason" and sometimes there is the real reason. Sort of like the "official reason" that we went to war against Iraq, remember that Bill? Wasn't the official reason the "weapons of mass destruction"? Where are those mythical weapons of mass destruction Bill?

[BobKamman]

@PATAX Many people are stressed out about this because they don't have a computer and high-speed connection like you do, and BOI reports have to be filed electronically.  Try to put yourself in someone else's shoes, or at least at someone else's desk.   The Washington Post recently did a story about how carrier pigeons are faster than the Internet, for some files at the upload speeds available in many parts of the country: 

https://www.washingtonpost.com/technology/2023/11/10/pigeons-are-faster-than-your-internet/

(Might be behind a paywall)

[PATAX]

@BobKamman You raised some good points there Bob.

[sjrcpa]

@TaxGuyBill 

"Once you've identified the Beneficial Owners"  There's the rub.

It's easy if you and I own an LLC, for example.

What about tiered partnerships? Holding Companies? 

[PATAX]

FinCen has updated its beneficial ownership information FAQs on November 16th to include new questions and answers. I have two questions that I have been pondering : Will a regular partnership that is not an LLC be considered a domestic reporting company? Also, what about an inactive old SMLLC that was started years ago, and had no employees and may have no federal TIN, will it have to get a Federal TIN,  as the domestic reporting company? ( I have at least one client that has an old inactive Sole member LLC, and I'm not sure if it has a Federal TIN or not. I'll have to dig into the files. I asked him before why he doesn't get it dissolved, because he has a high paying job now, but he said in the future he may fall back to that) Thanks for help.

[PATAX]

exemption no 23: inactive entity (chart for exempt from the reporting requirement). 

[IRonMaN]

Exemption 666 - you don't have to mess around with this stuff if you don't want to ----------------- I think it is in the fine print.  The really, really, small fine print.  But the print is so small, maybe it didn't really say that, but that's what I am going with today anyway. 🤔

[PATAX]

For those interested, Basics and Beyond income tax seminars has an excellent section on the corporate transparency Act on their 2023 year end federal tax update webinar. They have live virtual webinars coming up. I'm attending the one right now and we are on break. It is excellent. You can ask questions to the presenters. Some nerd from Pennsylvania asked why wouldn't they make an exception and ask the questions on the annual corporate or LLC tax return. The instructor said that makes sense. Oh by the way, while I was here in front of my computer at this webinar, a client stopped by to drop some data off. I told him about this Boi matter and he had no clue. The attorney who filed the initial papers with the Department of State died a few months or so ago.

[HOPE2]

I did not understand. It was a story or ....

[abctax55]

"Some nerd from Pennsylvania asked why wouldn't they make an exception and ask the questions on the annual corporate or LLC tax return."

LOL 

[BobKamman]

@PATAX  What is your point about your client's attorney dying recently?  I have spent most of this week helping with final arrangements and trust administration for an EA friend who died Saturday.  He was retired and sold his practice a few years ago, but are you suggesting that I track down his former clients to determine if he had helped any of them organize a business?  

[PATAX]

@BobKamman Bob, my point is that their company attorney, who I was friends with and respected, cannot take care of this Boi matter because he died. What don't you understand about that? I am not sure if I am going to take care of this boi bs or not. I do not need the work or any potential liability. But our clients look up to us and we like to help them. There are too many unanswered questions, including whether this is a legal matter or not. Most likely it will be either the company attorney, the company accountant (us), and/or the client that takes care of this . But I can tell you this, clients are not aware of this. Now it's time to go to sleep, so don't leave me any more messages that I have to answer in the morning. Good night.😉

[BobKamman]

As others come back for the new tax season, maybe it's a good idea to revive this thread.

[PATAX]

@BobKamman Yeah I think you are right Bob. But I'm not sure how to do that, other than people coming to this,  and then it gets put it in front of the list because of the usage

[joshuabarksatlcs]

RE: I guess I didn't realize there was a specific carve out that allows tax preparers to do FBAR.   Any idea where that is?

 Bob, please don't tell me I'm UPLing by listing the following.

1.  For practicing tax law: 5 USC §500(c) (2015), in conjunction with Section 10.2(a)(4), Circular 230, definition of "Practice before the IRS".

2.  For e-filing FBAR, per some guy from Lacerte Support. 

Oh just kidding.  I would actually cite the carve-out from the horse's mouth:

https://www.fincen.gov/individuals-vs-cpa-attorney-and-paid-tax-preparers#:~:text=Who%20is%20conside....

Specifically, 

Can an attorney, CPA, or an enrolled agent submit an FBAR via the BSA E-Filing System on behalf of a client?
Yes. An attorney, CPA, or an enrolled agent always may assist its clients in the preparation of electronic BSA forms for BSA E-Filing, including the FBAR.....

I never looked beyond the above, though I imagine there has to be some code or regulation that says "the Top Cheese of finCEN shall have the authority to promulgate ....." 

[BobKamman]

Here is a cleaner link without your Google search words

https://www.fincen.gov/individuals-vs-cpa-attorney-and-paid-tax-preparers 

[PATAX]

@BobKamman thanks Bob. That link has some really good information.

[Taxes-by-Rocky]

Found on Web:

In addition to phasing in access to BOI across federal agencies, FinCEN will initially use its discretion to allow only certain financial institutions such access. At this time, FinCEN “intends to permit only financial institutions with obligations under the 2016 CDD Rule to have access to the BOI database.” Thus, certain BSA-regulated financial institutions, such as Money Services Business, casinos, insurance companies, precious metals dealers, and others which are not subject to the 2016 CDD Rule, will not have database access initially, creating potential information imbalances among BSA-regulated entities. FinCEN explained that security standards associated with such entities warrant additional scrutiny prior to granting access.

Good to know the casinos, draft kings, fanduel, etc. have to wait a year.  Probably H&R Block...'er Intuit...too. LOL