With the Corporate Transparency Act’s beneficial ownership information (BOI) reporting deadline fast approaching, some CPAs are hesitant to advise their clients on the new requirements. Concerned about the risk CPAs may be taking on — including whether advising clients on the reporting requirements would constitute the unauthorized practice of law — the American Institute of CPAs (AICPA) is pushing for a one-year delay.
Melissa Wiley, a partner at Lowenstein Sandler LLP, broke down the new BOI requirements for AICPA members during the organization’s National Tax Conference on November 11 — with the key takeaways that the law is currently still in effect despite pending litigation and that the year-end filing deadline is real.
Wiley noted that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) estimates that there are 32.6 million existing reporting entities, and it expects another 5 million new entities will be subject to the requirements annually. However, FinCEN has received fewer than 7 million reports to date, she said, despite the January 1, 2025, filing deadline for most entities.
Melanie Lauridsen, AICPA’s VP of Tax Policy & Advocacy, has been busy this year putting together webinars and other information for CPAs on the BOI reporting requirements. “We believe that our members should absolutely be raising awareness” about BOI reporting requirements, Lauridsen told Checkpoint.
Unauthorized practice of law. One issue that has emerged is whether CPAs, in assisting clients with or even informing them of filing requirements, are engaged in the unauthorized practice of law. Wiley said that “some states have come out now and answered that question.” And the answer, she added, is “it sort of depends.”
According to Lauridsen, “so far, no state has said that providing BOI services is considered unauthorized practice” of law. She explained that “the majority of filings are simple… and the risk associated with them” does not “fall into unauthorized practice of law.”
But sometimes the filings will be “complex” Lauridsen added, pointing to AICPA members whose clients are mainly venture capitals and private equity. “You have to understand your risk,” she explained.
For a “super, super simple” report, Wiley agreed it is safe for CPAs to advise and assist their clients. However, more “complicated” analysis might be required regarding, for example, who qualifies as a beneficial owner of a trust. In such instances, said Wiley, “it sure does start to look like the practice of law, and probably something you don’t want to do” as a CPA.
Iowa, Maryland, and New Jersey have all opined on when a CPA crosses the line into unauthorized practice of law for BOI reporting purposes — with the key factor being complexity.
To the extent that filing assistance “requires the knowledge, skills, and training of a lawyer,” reads the Maryland Attorney General’s opinion, “that assistance may violate the prohibition on unauthorized practice of law.” The opinion lists activities that cross that line — namely, applying general legal principles of statutory or contract interpretation, analyzing legal precedent, or identifying legal issues.
The New Jersey Supreme Court’s Committee on the Unauthorized Practice of Law says it “relies on the professionalism of CPAs” to “recognize when a filing is more complex and it is in the client’s interests for a lawyer to be retained.” Iowa’s high court more broadly determined that it is not the unauthorized practice of law for nonlawyers to assist clients with BOI reporting.
An ongoing obligation. Another concern, explained Lauridsen, is the regulatory requirement to update BOI within 30 days of any changes. This “30-day updated or corrected requirement,” she said, “essentially becomes a monthly tracking engagement.”
According to Lauridsen, CPAs “don’t necessarily want to take on that engagement, because how can you ensure your client is calling you on a monthly basis and they’re being straightforward and understanding what changes need to happen?”
Lauridsen said the current monthly update requirement “is one of the biggest issues” for AICPA members. Revising the 30-day requirement to a more workable annual requirement is within FinCEN’s ability, she said, adding “it does not need a legislative change.”
CPAs’ businesses are structured such that they will meet at least once per a year with clients in preparation for their tax returns, Lauridsen said, and it would make sense to capture any BOI changes during those yearly meetings.
AICPA member Jerry Schreiber agreed with that approach, noting a switch to require filing and updating on an annual basis “makes sense.”
Push for changes. Amid the uncertainty, AICPA wrote House Financial Services Committee and Senate Banking Committee leadership on November 11, requesting a suspension of the filing requirement “for at least a year so the small business community can become better informed of their filing requirement.”
The letter points to “a lack of clarity and unanswered questions about the reporting requirements.” It also calls out “the unnecessarily tight 30-day timeline for report amendments and changes, which is not consistent with tax filing.”
As far as what CPAs are actually doing, Schreiber told Checkpoint he had sent out two sets of letters to clients he believed may be subject to the BOI requirements. On whether those clients had submitted reports, he suspects “they’re waiting until December.”
Schreiber hadn’t received any questions from his clients about the BOI requirements. “The only questions come from CPAs. They want to know what to do,” he said.
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