The past few months, we’ve been keeping an eye on a new reporting requirement that will create a massive burden on small business owners. Starting in 2024, millions of small businesses will be required — as part of an anti-money-laundering initiative — to file a “beneficial ownership information” (BOI) report with the Financial Crimes Enforcement Network (FinCEN, a branch of the U.S. Department of Treasury). Failure to comply can cause the company and those responsible steep fines — $500 per day up to $10,000 — and even possible jail time. 

And yet, the vast majority of small business owners know nothing about this new rule, and just a few months before year-end, guidance is still forthcoming. Too many questions remain regarding how it will affect the targeted small business owners — those who run a business that had to file a document with the Secretary of State to create the company (C-Corps, S-Corps, and LLCs, most commonly).

The super-surprising part here is that exemptions are only designed for larger companies — not small businesses. Corporations or LLCs with more than 20 full-time employees, more than $5 million in gross receipts, and an operating presence at a physical office in the USA — as well as those already regulated by the federal or state government — qualify for a “large operating company” exemption.

The National Federation of Independent Businesses has prepared a handy fact sheet available to the public that includes a great summary of the information that owners will need to provide:

The NFIB Government Relations Director Jeff Brabant comments, “anyone who has a 25% or greater stake in the company or senior officer will have to register a copy of their driver’s license and business information. This is a daunting task and probably the biggest regulation that no one is talking about right now.”

“NFIB is pushing for a full repeal of this legislation,” said Brabant. “We feel it’s unnecessary; however, administratively there is a chance that FinCEN delays it, and there’s also a chance that Congress delays it for one year. The statute allowed for up to two years for reporting for companies once this is passed on January 1; however, FinCEN chose one year. So FinCEN can choose to delay it another year and that’s something we hope they do.”

In today’s AICPA Town Hall, they issued a call to action, asking small business owners — CPA firms especially — to contact their representatives by September 15th and request a delay of the implementation. They’ve provided a Word Doc template with background and speaking points for your email or phone call, and have encouraged members to share it widely.

From the AICPA:

Two bills have been introduced in U.S. Congress to delay this rule – H.R. 4035 and S. 2623, both titled the Protecting Small Business Information Act of 2023. These identical bills introduced in the U.S. House by Representative Patrick McHenry and introduced in the U.S. Senate by Senator Mike Rounds would delay the start date of the rule providing additional time for small businesses to learn about and better understand their new reporting requirements. We want to obtain as many cosponsors in both the U.S. House and U.S. Senate as possible, to keep these bills moving. We are asking you to reach out to your House of Representatives Member to ask them to cosponsor H.R. 4035, and to also reach out to your two United States Senators to ask them to cosponsor S. 2623.

· You can find your House of Representatives Member at https://www.house.gov/
· You can find your two U.S. Senators at: https://www.senate.gov/senators/senators-contact.htm

In addition to the Word Doc and Town Hall presentation, the AICPA has created a Beneficial Ownership Information resource page, and an FAQ for CPA firm practitioners — many of whom are struggling with how to help their small business clients implement yet one more set of compliance requirements.

Wolters Kluwer has also created a free set of resources for those who may be affected by the new legislation, which you can access here, including an on-demand webinar where you can learn more.

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