Should You Provide CTA Services?
Should You Provide CTA Services?
The Corporate Transparency Act will go into effect on January 1, 2024. Will providing these services by a CPA be considered "practicing law".
The Corporate Transparency Act goes into effect January 1, 2024. Most farmers and other taxpayers assume that CPAs can help them with preparing the online information required to be filed on the Financial Crimes Enforcement Network (FinCen).
In brief, CPAs and enrolled agents are allowed to prepare and advise on income tax matters. However, that authority essentially comes directly from the Internal Revenue Service. FinCen is not part of the IRS. Therefore, does this authority to help clients carry over or if CPAs and EAs provide these services is this now considered practicing law.
AON Insurance has provided a risk analysis on this topic for CPAs. It reviews what these services are; the risks associated with providing these services; and what CPAs likely should do if they consider providing these services. Or even what they should do if they don’t provide these services.
Most clients will expect you to help with filling out this form and it is well worth reading the analysis to determine if the risk is warranted.
There may be additional guidance from FinCen authorizing CPAs and EAs the authority to help clients with this filing, but as of this date that has not happened.
Remember that the penalty for not filing these reports timely is $500 per day up to a maximum penalty of $10,000 per company plus potential prison term of up to two years. This should not be taken lightly.
I totally agree. The IRS has the information on 99% of these clients. It is likely the single member LLCs that should be filing these reports with FinCen or have the IRS require reporting this information when the applicable return is filed. It would be very easy to report it that way but that is too logical.
This is an interesting question. CPAs have been assisting in preparing FBARs, which are filed with FinCEN. For 99% of the CTA reports, there shouldn’t be any complexity; the reports could be completed by the client. Perhaps the CPAs services can be a reminder to the client: “Did you complete your CTA report?” It’s so ridiculous, considering that most businesses are owned by individuals. Annual tax filings could simply add the newly required information to the tax return, and let IRS transmit the information to FinCEN.