AICPA backs bill limiting beneficial ownership reporting

The American Institute of CPAs expressed its support for legislation limiting the reporting of businesses' beneficial ownership information to the Treasury Department's Financial Crimes Enforcement Network.

Last month the House Financial Services Committee voted to advance legislation that would effectively repeal the Corporate Transparency Act and its beneficial ownership information reporting requirements.

The Repealing Big Brother Overreach Act would limit beneficial ownership information reporting to foreign-owned companies, codifying a move by the Treasury Department last year scaling back enforcement of the requirements under the Trump administration. Last March, the Treasury Department's Financial Crimes Enforcement Network posted an interim final rule requiring only foreign companies to report on their true owners to FinCEN while exempting domestically owned companies. The reporting requirements are supposed to deter money laundering, tax evasion, corruption, drug and human trafficking and other illicit activities by anonymous shell companies, but have been criticized for being too broad and costly to implement, especially for small businesses. 

The AICPA sent a letter last Friday to Rep. Warren Davidson, R-Ohio, who introduced the bill last year in the House, and a second letter to Sen. John Kennedy, R-Louisiana, and Mike Lee, R-Utah, who have introduced a companion bill in the Senate. In the letters, the AICPA expressed its strong support for the legislation.

The AICPA noted the Treasury Department's shift in enforcement of BOI reporting requirements has eased pressure on CPAs and their small business clients by suspending enforcement for domestic entities and U.S. citizens.

"The accounting profession supports reasonable, effective and risk-based tools to combat money laundering, terrorist financing and illicit finance," wrote AICPA president Mark Koziel in the letters. "At the same time, overly broad reporting obligations can impose disproportionate burdens on legitimate domestic businesses, particularly small and mid-sized entities with limited administrative resources."

He thanked the lawmakers, adding, "We appreciate your continued work to create a financial regulatory framework that is targeted, effective and appropriately risk-based while protecting small businesses and the trusted financial advisors who work with small businesses from unnecessary regulatory burdens." 

The AICPA has been closely following developments in BOI reporting ever since the passage of the Corporate Transparency Act as part of a larger defense authorization bill in 2021 and urged FinCEN to consider the burden and cost imposed by the requirements.