Many Accounting Firms Will Be Required to Comply With New Beneficial Ownership Reporting Rules

By PPC Staff

In January, we gave you a heads up on the beneficial ownership reporting requirements under the Corporate Transparency Act. Domestic and foreign entities that have filed formation or registration documents in a state are required to report unless they qualify for one of 23 exemptions. Existing entities which were created or registered before January 1, 2024, are required to report by January 1, 2025. Companies created or registered on or after January 1, 2024, but before January 1, 2025, have 90 days to file. Those entities created or registered after January 1, 2025, have a 30-day reporting requirement.

A Clarification on Reporting Exemptions

The Financial Crimes Enforcement Network (FinCEN) provides a Small Entity Compliance Guide and a Frequently Asked Questions (FAQs) document that addresses a variety of questions regarding the beneficial ownership information reporting rule. Among other things, these resources address what companies are exempt from the reporting requirement.

While accounting firms are listed among the 23 exemptions, the Small Entity Compliance Guide notes that this exemption is somewhat narrow, as it is only available to public accounting firms registered in accordance with Section 102 of the Sarbanes-Oxley Act of 2002.

In addition, an exemption is provided to large operating companies that, among other criteria, employ more than 20 full-time employees in the U.S., have a physical operating presence in the U.S., and have filed a federal income tax return in the previous year with more than $5,000,000 in gross receipts or sales.

Companies should ensure that they review the criteria for a qualifying exemption before deciding that they are exempt.

Recent Developments

FinCEN opened an E-Filing website for reporting beneficial ownership information on January 1, 2024. The website can be found here.

Additional Resources

The AICPA provides resources on the beneficial ownership information reporting requirement including client letters, FAQs, links to FinCEN resources, recent news and articles, and other information.

The resource center can be found here.

This article was originally published on Checkpoint’s Accounting and Auditing Update (PPC) in February 2024.