authorization as part of a criminal or civil investigation. Additionally, financial institutions, with reporting company consent, may be able to access the database for customer due diligence requirements under the law. Federal and state regulators may also access BOSS for compliance and administration purposes. FinCEN has engaged in a separate rulemaking process and issued a proposed rule that would regulate who has access rights to BOSS and under what circumstances, and outline data security protocols to safeguard BOI reported under the CTA.21 Although comments on the proposed rule were due by Feb. 14, 2023, FinCEN has not yet issued a final rule. Penalties Failure to report carries civil and criminal penalties.22 Willful non-reporting can result in a fine of up to $500 per day (capped at $10,000) and up to two years imprisonment. Knowingly disclosing BOI is subject to even more draconian penalties (i.e., $500 per day, capped at $250,000, and up to 5 years imprisonment). Failure by reporting companies to disclose correct information can also be penalized, and this can extend to individuals who influence the reporting company not to report, as well as senior officers of the reporting company in charge at the time of non-compliance. As mentioned above, the CTA has a safe harbor provision for reporting companies that voluntarily rectify inaccuracies in submitted BOI reports within 30 days of detection and no more than 90 days after submission of the report. 23 However, this safe harbor does not cover any inaccuracies corrected after 90 days, deliberate evasion attempts, or known inaccuracies at the time of submission. Implications for Reporting Companies & Their Advisors To comply, reporting companies will need to implement policy, process, and system changes to collect and report BOI. They must properly identify beneficial owners and company applicants and maintain up-to-date identification documentation. Reporting companies with frequent ownership changes will need to be especially prudent with monitoring and reporting. Additional compliance costs and burdens, including employee training on CTA duties and retention of third-party providers, likely will be incurred. Advisors, like attorneys and accountants, hold an integral role in assisting reporting companies with adhering to CTA reporting rules and timelines. Key responsibilities may include: Identifying which clients are subject to CTA reporting requirements based on formation or registration date, ownership structure, and eligibility for exemptions; Informing clients of new reporting requirements under the CTA and timelines for compliance (i.e., explaining the breadth of the definition of “beneficial owners”); Assisting clients with gathering necessary information on all beneficial owners ahead of reporting deadlines and maintaining documentation to demonstrate compliance; Staying updated on reporting requirements as FinCEN releases additional guidance; Recommending that clients establish processes to collect ownership details for future reporting needs; and Encouraging clients to reach out to you or legal advisors with any questions or need for advice on reporting procedures. Conclusion While certain regulations and an electronic filing system are still forthcoming, advisors and businesses need to understand the key provisions, timelines, and implications of this far-reaching legislation. The CTA ushers in a new era of federal beneficial ownership reporting that will impact nearly all privately held entities. Accountants and other advisors will be at the forefront of the compliance effort, helping businesses grasp and align their practices with these new transparency rules. With the right preparation and guidance, advisors can help clients CONTINUED FROM PAGE 13 14 Nebraska CPA
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