Hi Bob, thanks for information, so a tax preparer who is not a CPA,EA can not do it behalf of clients? right?
@BobKamman Thank you for trimming it down to the link
https://www.fincen.gov/individuals-vs-cpa-attorney-and-paid-tax-preparers
I was aware of finCEN's authorization, but couldn't quite put my finger on the source without doing the word search - upon seeing folks' request for the basis for the carve-out. I realized the link I posted was ridiculously long, but didn't know it was because of the search words. Still so many tidbits about googling that I don't know about. Live and learn.
Also liked your "I don't know" to @HOPE2 's question. Had you given any other answer, you would have been UPLing.... Ha!
I sense an attitude among some people that they aren't going to help their clients with this because they don't like the law. Is that really who we are? May I suggest an alternative? "We will be happy to help you file this report (for a reasonable fee) once you have shown as the answers you have received from your Senator and Representative, to your objection to this unreasonable paperwork burden. Here are their names and addresses. All answers must be dated before November 5, 2024."
I don't think it is about liking the law or disliking the law. I think the hesitation comes from warnings from insurance companies, the AICPA, and maybe the ASPCA ----- just for good measure. If the powers that be tell folks not to go into the pool, a lot of folks are going to stay as far away from the pool as they can.
@IRonMaN you are exactly right Iron Man. 100% correct. And another thing they need to do, which is a big hindrance to many, is the potential massive amount of potential penalties. I think they need to change that, and if someone just makes an honest to God mistake and doesn't report something in a timely manner or correctly, that there won't be massive penalties like that. If they don't want to do that, then I think they should just scrap this Boi disaster.
Be sure to sign up for Spidell Flash E-mail, even if you are not in California
@joshuabarksatlcs I just figured out what you mean by UPL. That's one thing I don't have to worry about. Well, as long as I keep paying my Bar dues.
@PATAX wrote:
if someone just makes an honest to God mistake and doesn't report something in a timely manner or correctly, that there won't be massive penalties like that.
You still haven't read the law or the FAQs yet? The penalty applies to "willful" violations.
@TaxGuyBill but how will that term be interpreted and used in actual cases.
@BobKamman It was a toss up between mea culpa and touché. I didn't know your other credential(s). You went in length about UPL in this thread, and I was just messing with you.
As you know, according to the state bar, in California, only attorneys can practice law. When someone who is not licensed to practice law provides services that can only be performed by attorneys, that is called the unauthorized practice of law (UPL). UPL is a crime.
For the rest of us that were not in on the joke, I found this entertaining article.
https://www2.csudh.edu/rmalamud/NA1293.pdf
B. 7. Is a reporting company required to use an attorney or a certified public accountant (CPA) to submit beneficial ownership information to FinCEN?
No. FinCEN expects that many, if not most, reporting companies will be able to submit their beneficial ownership information to FinCEN on their own using the guidance FinCEN has issued. Reporting companies that need help meeting their reporting obligations can consult with professional service providers such as lawyers or accountants.
[Issued November 16, 2023]
Thanks. Do you know who can file BOI behalf of the clients in California? I heard , every state has different law.
What 'they' say is in NO way binding on what 'our' [the tax preparer] licensing board(s) and/or errors & omissions insurance carrier have to say. As well as what various state legal licensing boards have to say about whether this is/may be UPL.
You mean a CPA or EA and CTEC can do it in California, for me hard to understand what is going to be?
I don't believe anyone has answered, yet, exactly which states have determined whether CTA/BOI reporting is UPL if done by anyone except an attorney (excluding the actual owner of the entity).
HAVE you discussed this with your E&O insurance provider?
No, but NATP will launch a webinar in 17,18 Jan for this but I do not know if they know if I ask them during live webinar otherwise I lost $$$ for registration.😂😂
thanks a lot@abctax55.
I did not have E&O insurance ever, a tax preparer does have?
"I don't believe anyone has answered, yet, exactly which states have determined whether CTA/BOI reporting is UPL if done by anyone except an attorney (excluding the actual owner of the entity)."
Anna, at this week's AICPA Town Hall they said no state has yet opined on whether this would be UPL.
Thanks Susan; and I'm not holding my breath for anything concrete any time soon.
I put a brief "this is what's going on, talk to your attorney" in my organizers/engagement letter.
Bob,
The 'reservations' to the BOI regime come from the lack of foresight or effort that went into its design. I realize, for Congress, any action is like watching sausage being made. However, the drafting of good laws - those that stick around for more than one cycle and do more good than harm - require a significant amount of planning. Clearly, that was not the case here (as noted by all of the comments in this blog). Upon implementation, we will have expansive knowledge as to the owners of every local pizza shop and liquor store, but no greater knowledge as to who controls our defense contractors, technology infrastructure or financial institutions; or for that matter, who just walked across our 'border.' It seems like a massive amount of effort for very little gain. I won't even mention the privacy aspects of a database that will inevitably be hacked, or worse, used for marketing, politics or other deviant purposes. I know, we're only talking about the local pizza shop, but that party is probably the lowest on the food chain when it comes to risk management (pun intended). Serving our clients requires consideration of all these aspects, now and into the future, not just a determination of whether we can draft an engagement letter adequate to perform an end run around the unauthorized practice of law. Quite frankly, I don't think any of my clients will be better off as a result of this undertaking. If it is a KYC/AML issue, then the parties at the front end of that infrastructure should be responsible for addressing those issues not the guy trying to prepare a simple tax return for a small business (as this isn't a large business issue). To that end, we've been down this road before. We spent a great deal of effort trying to cram healthcare into a tax return and that didn't work out so well either. Just my optimistic view.
Is advising your client that there is a legal requirement that they should discuss with a lawyer, in itself the unauthorized practice of law?
Filling out tax returns is obviously the practice of law, but there aren't enough lawyers around to do it so every unlicensed preparer, from H&R Block part-timers on down are allowed to do it. I fail to see how helping someone fill out a form with ownership information is anything more than helping someone fill out a form with ownership information. If a question arises as to the correct answer, you can always refuse to finish
Are the instructors at driving schools practicing law when they advise students on how to comply with rules of the road? Are gun dealers practicing law when they help customers get past background checks? Playing the UPL card may be one way to lobby for repeal, but I wouldn't take it too seriously. It will be interesting to see how many CPA's who are washing their hands of participation, will lose clients to those who are willing to help (for a fee). What I suspect is that a cottage industry will pop up, with enterprises that do nothing but FinCEN compliance. Until they add other services, like tax return preparation.
@sjrcpa wrote:
Anna, at this week's AICPA Town Hall they said no state has yet opined on whether this would be UPL.
And who are they expecting to issue opinions? I wouldn't expect CPA's to be that ignorant about how the process works.
Just to add a little to this lively discussion, I received this in an e-mail from Thomson Reuters this morning:
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I think they are hoping each state's Bar Association
@sjrcpa That's not how the system works. Bar associations, or prosecutors in states that have UPL statutes, make specific charges against specific people doing specific things. Ultimately, the state's Supreme Court (or in New York, the Court of Appeals) decides on the definition. It's not going to happen, but if lawyers were really concerned about "losing" all this work, it would take several years for a decision.
Thanks for the info @BobKamman
People complain about the penalties for willful nonfiling or misreporting. But look at the penalties for financial institutions who find themselves engaging in money laundering, because they don't "know your client." That's what this law is all about. That's why they have access to the reports (with customer permission -- you don't have to consent, but they don't have to let you open an account).
There is at least one situation where I would avoid helping a company file these, and that's a partnership where you don't know enough about the partners to know if they are who they say they are. And at any given time, some number of partnerships (or LLC's) are going to be engaged in disputes over who is in and who is out. I haven't seen the application that applies for multi-owner entities -- do all of them have to upload their drivers license or passport? -- but I would want to see something signed by all those claiming to be owners, confirming that the information is correct.
I wonder what investment clubs are doing with this. Anyone prepare returns for those?
@BobKamman Bob you made good points there but I'm sure you agree with me that the financial institutions have plenty of money to pay those fines. Does Grandma Jones little antique store have the money to pay massive penalties?
@PATAX You and I both know that Grandma Jones' antique store is just a front for a money laundering operation that finances terrorists and insurrectionists. Or maybe not. But otherwise why would she be willfully violating the law?
@BobKamman "willfully" that's the term they use now. We will see how they interpret that, and we will see what it eventually turns into. Reminds me of Bill Clinton and NAFTA. He didn't have the votes to get it passed, so he promised that if NAFTA did not benefit American workers that they would rescind it. A great lie. Millions of good paying jobs were lost and tens of thousands of companies were closed down, and they never went back and rescinded it. As one of my accounting professors used to say: "Burn me once shame on you, burn me twice shame on me".
@PATAX Yes, those are definitely comparable. A political promise and a term that courts have been applying for decades, if not centuries. NAFTA is old wine in new bottles now called USMCA (sung to the tune by the Village People, a favorite campaign song). Willful is the same old word that it has always been.
Why are existing companies not grandfathered? Because the whole idea is to let banks off the hook. Granny's Antiques may have filed an LLC in 1980. But Granny might have died in 2023 and her estate sold it (including the trade name) to Dmitry Rybolovlev, who saw a chance to launder money with some of the inventory. How is PNC Bank supposed to know that? There's no record of the sale anywhere.
@BobKamman in Pennsylvania the LLC companies that I have seen are sole proprietorship LLCs or partnership LLCs. And when those entities assets are sold, a new entity is created. Not sure what's going on in your neck of the desert.😉
@PATAX Some businesses change ownership through asset sales, others through stock sales, including what are known as "full entity" sales if an LLC is involved. Maybe word has not reached your Commonwealth that "aged shelf" businesses are a thing.
I think that once practitioners (of whatever venue) have begun implementation of these rules for their 'small business' clients with the somewhat complicated ownership and control structures they will better appreciate the problems that lie ahead. This would include the small business, run by multi-generational families, with silos, who don't speak with one another, where control is a mess, ownership is in question and the state court will likely be the determining factor on exactly who has the ultimate ownership and control over each business. Naturally, this will all be outlined in your income and estate tax planning advisory work you conducted last year. Certainly, corporate documents, corporate record books, income tax returns (with those dreadful foreign information filings), FinCEN filings, estate planning documents, secretary of state filings, etc. should all align perfectly. If not, the simple questions is: Where do the penalties lie (not to mention the litigation)? Are amended filings required and, if so, with which agencies? Certainly, this could all be easily corrected by the client (or 'preparer') for a small price. Just remember, it's only a pizza shop.
Notice I didn't even mention the gift tax data mining exercise that will be done on the database. I think California had the same problem a few years ago.
It's no wonder we are losing small businesses at an alarming rate. Wait until we drag trusts into the mix (the non-business type).
In the words of my political hero Mayor Daley, "what trees do they plant?" What is your solution to law enforcement trying to police money laundering by the criminal elements who do their best to masquerade as legitimate enterprises? I can agree that an AK-47 is not the best way to kill cockroaches, but so far no one has suggested a better way.
And I also question when they are going to come for the trusts. We might be doing a great job on the cockroaches in the kitchen, but are we just chasing them into the bathroom?
What simply amazes me, is because of a few bad apples they're throwing this wide net out and putting everybody through this Boi BS. This is absurd. Contact your congressmen and urge them to rescind the Boi monster.
"Contact your congressmen and urge them to rescind the Boi monster."
But first, those congress peoples will have to consult with their advisors to find out if rescinding will add to or subtract from their vote total in the next election. Always remember, for the most part, elected officials do not care what is good for the country or their constituents -------- they only care about how something will affect them in the next election.
RE: AK-47 y cucarachas....
Perhaps I've watched one too many flix on Netflix, but allegedly which type of entities are mostly used for international money laundering?
NGO's.
What is one of the exceptions to BOI filing? Nonprofit organizations.
In many fronts, the U.S.A. leads the world in international endeavors. Correct me if I'm wrong, but his time, we have to follow several other countries. It was not up to the Congress to initiate the mandate. Good luck in getting it rescinded....
@joshuabarksatlcs What do you mean, it was not up to Congress to initiate the mandate? They're the ones that enacted the law. In fact, it was over an Executive Branch veto.
You say NGO, I say churches. Not that they are the only ones in that sector, but you have to admit they're included. And there are other tools to use for that sector, they just cost more. Don't let the perfect be the enemy of the good.
@BobKamman Of course the law has to be enacted by the Congress.
Germany, UK, South Africa, Philippines, Ghana, Kenya.... all had their BOI registers, and in the EU, Member States had to introduce public company beneficial ownership registers by January 2020, and as of mid-2022, only 9 EU members had not adopted. The U.S. was coming on board late. It is an international thing. My point was "good luck in asking Congress to rescind CTA". I guess I didn't make my point very clear.
@joshuabarksatlcs in regard to what foreign countries do: reminds me of old saying that parents tell their children: "if everyone else jumps off a bridge, are you."
@joshuabarksatlcs wrote:
Of course the law has to be enacted by the Congress.
Germany, UK, South Africa, Philippines, Ghana, Kenya.... all had their BOI registers, and in the EU, Member States had to introduce public company beneficial ownership registers by January 2020, and as of mid-2022, only 9 EU members had not adopted. The U.S. was coming on board late. It is an international thing. My point was "good luck in asking Congress to rescind CTA". I guess I didn't make my point very clear.
@joshuabarksatlcs Late to the party. Don't disagree with that. But in most instances, these filings are often not handled by accountants or tax preparers but other professionals such as company secretaries, attorneys, or those who manage company formation and its periodic license/registration renewal.
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