FinCEN proposes BOI reports deadline extension for certain companies

Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Notice of Proposed Rulemaking (NPRM) on Wednesday that would extend the deadline for companies created or registered in 2024 to file their first beneficial ownership information (BOI) reports.

The NPRM (RIN 1506-AB62) would provide 90 days for those companies to file initial reports rather than the original deadline of 30 days from the earlier of the date on which the company receives actual notice that its creation or registration has become effective or the date on which the secretary of state first provides public notice that the company has been created or registered.

The NPRM made no other changes to the BOI reporting rule, leaving in place deadlines for other reporting companies; those created or registered before Jan. 1, 2024, would have until Jan. 1, 2025, to file initial BOI reports with FinCEN, and entities created or registered on or after Jan. 1, 2025, would have 30 days to file initial BOI reports.

The BOI reporting requirement is an anti-money laundering initiative enacted through the Corporate Transparency Act, P.L. 116-283, in 2021 mandating that BOI be reported to FinCEN. The requirement would apply to most companies.

FinCEN Director Andrea Gacki said in a release that FinCEN believes the proposed extension will, among other things, increase compliance because it will give reporting companies created or registered in 2024 additional time to understand their regulatory obligations and obtain the required information. They will also have additional time to become familiar with FinCEN’s guidance and resolve questions that may arise in the process of completing their initial BOI reports.

As first stated in its September 2022 regulatory impact analysis, FinCEN said it is difficult to estimate the number of entities that are reporting companies. It assumes that all entities created or registered before the effective date of Jan. 1, 2024, that are subject to the BOI reporting requirement — 32.6 million entities — will submit initial BOI reports in the first year. In 2025 and beyond, FinCEN estimates that almost 5 million initial BOI reports will be filed each year, the same estimate as the number of new entities per year that meet the definition of a reporting company and are not exempt. The total five-year average of expected BOI initial reports is about 10.5 million.

FinCEN estimates that about 6.6 million BOI update reports will be filed in 2024, and about 14.5 million such reports will be filed annually for 2025 and beyond. The total five-year average of expected BOI update reports is almost 12.9 million.

Last week, FinCEN published the Small Entity Compliance Guide to help small businesses navigate the new rules for reporting BOI. The guide said FinCEN is conducting outreach “to ensure that all reporting companies are aware of their reporting obligations, including their obligations to update or correct beneficial ownership information.”

In response to a question from the JofA, FinCEN said the outreach includes a planned contact center, which will be open before the effective date of Jan. 1, 2024. The outreach also will include webinars and educational materials, such as the compliance guide, a FinCEN official said.

Officials provided no other details on the contact center, such as the number of people who will work there and its hours of operation.

In a statement to Congress in July, the AICPA cited the comprehensive nature of the BOI reporting rules and small businesses’ lack of awareness of the rules as reasons to delay their effective date.

The statement was submitted to be included in the record for a July 18 hearing of a subcommittee of the House Financial Services Committee.

The AICPA also joined a coalition of organizations to raise awareness of the BOI reporting requirement. The AICPA also submitted comments to FinCEN in February 2022, urging it to consider the burden and cost imposed by BOI reporting requirements.

In a letter to Rep. Patrick McHenry, chair of the House Financial Services Committee, the AICPA said it supports the Protecting Small Business Information Act of 2023, H.R. 4035, which would delay the start of BOI reporting.

Written comments regarding the NPRM should be submitted by Oct. 30.

— To comment on this article or to suggest an idea for another article, contact Martha Waggoner at Martha.Waggoner@aicpa-cima.com.