BOI QUESTION

[jklcpa]

There is the question about not having felony drug conviction by year's end for the AOTC education credit. 

 

[Lion EA]

We have to ask a LOT of personal questions. Form 8863 asks:

26. Was the student convicted, before the end of 2023, of a felony for possession or distribution of a controlled substance? Yes — Stop! Go to line 31 for this student. No — Complete lines 27 through 30 for this student.

Form 8863 Instructions:

Line 26. Check “Yes” if the student was convicted, before the end of 2023, of a federal or state felony for possession or distribution of a controlled substance. If you checked “No,” complete lines 27 through 30 for this student. If you checked “Yes,” the student isn't eligible for the American opportunity credit; skip lines 27 through 30 and go to line 31. 

[Lee B]

Good points. However is anyone aware of any IRS guidance on any deduction or credit that requires the filing of BOI?

[JohnH]

I just had an unsettling conversation with a smart, energetic young guy today.  He was giving me a quote for a home repair company whom he represents.  He mentioned he's an Independent Contractor, so I casually asked him how he is organized and he replied that he is a single-member LLC. My alarm bells went off, of course.  As it turns out he filed Articles of Organization with the Sec of State on May 2 of this year. (no lawyer involved).   When I asked him if he knew about the CTA and BOI he was clueless.  So I gave him some information & links, urging him to take action.  As I see it, as of today he has a potential $5,000 penalty hanging over his head which is running him $500/day until he complies. Sure wish we'd had this  conversation a week ago.  

Does  anyone have an opinion on how FinCen is liable to respond to situations like this? Seems like there should eventually be some manner of relief for inadvertent failures, but haven't read anything to this effect.  By comparison, in some respects they're been fairly lenient with Foreign Accounts reporting, even granting automatic extensions to October of each year.  And I seem to recall they had a program several years ago to allow people to come into compliance if the failures were inadvertent.  But so far this BOI reporting is one of the most draconian things I've ever witnessed. 

[Lee B]

Copied from updated FINCEN FAQs:

 

"K. 3. Who can be held liable for violating BOI reporting requirements?

Both individuals and corporate entities can be held liable for willful violations. This can include not only an individual who actually files (or attempts to file) false information with FinCEN, but also anyone who willfully provides the filer with false information to report. Both individuals and corporate entities may also be liable for willfully failing to report complete or updated beneficial ownership information; in such circumstances, individuals can be held liable if they either cause the failure or are a senior officer at the company at the time of the failure."

I added the underline emphasis.

 

[Randall]

On 8/14/2024 at 9:26 PM, JohnH said:

I just had an unsettling conversation with a smart, energetic young guy today.  He was giving me a quote for a home repair company whom he represents.  He mentioned he's an Independent Contractor, so I casually asked him how he is organized and he replied that he is a single-member LLC. My alarm bells went off, of course.  As it turns out he filed Articles of Organization with the Sec of State on May 2 of this year. (no lawyer involved).   When I asked him if he knew about the CTA and BOI he was clueless.  So I gave him some information & links, urging him to take action.  As I see it, as of today he has a potential $5,000 penalty hanging over his head which is running him $500/day until he complies. Sure wish we'd had this  conversation a week ago.  

Does  anyone have an opinion on how FinCen is liable to respond to situations like this? Seems like there should eventually be some manner of relief for inadvertent failures, but haven't read anything to this effect.  By comparison, in some respects they're been fairly lenient with Foreign Accounts reporting, even granting automatic extensions to October of each year.  And I seem to recall they had a program several years ago to allow people to come into compliance if the failures were inadvertent.  But so far this BOI reporting is one of the most draconian things I've ever witnessed. 

I thought the first deadline was the end of this year (2024).

[TexTaxToo]

34 minutes ago, Randall said:

I thought the first deadline was the end of this year (2024).

That's for entities in existance at the beginning of 2024.

Entities created (registered) in 2024 have 90 days.

Entities created in 2025 or later have 30 days.

https://www.fincen.gov/boi-faqs#B_2

[Randall]

3 hours ago, TexTaxToo said:

That's for entities in existance at the beginning of 2024.

Entities created (registered) in 2024 have 90 days.

Entities created in 2025 or later have 30 days.

https://www.fincen.gov/boi-faqs#B_2

Yes, I forgot about that.  Good point.

 

 

[Margaret CPA in OH]

On 8/7/2024 at 10:35 AM, Lee B said:

No, the FAQs have a definite answer about sole proprietors filing Schedule C with a "dba"

I finally got around to reading the information on the link provided above including the FAQ's.  I do not see this definite answer about sole proprietors.  I must be reading past basic information.  I sincerely hope this is true but would love to read it myself so maybe someone with a sharper brain and eyes (almost everyone!) could point me there.

I am also confused about SM LLC's.  I have a client who files a Schedule C and is SM LLC.  Her newest enterprise is a wine store which just opened and I think will be very successful  All I can find is the flow chart that shows it 'May be a domestic reporting company' but I go in circles with the definition of a domestic reporting company and 'may be.' 

I've done the Google and read several references without seeing definitive answers to my questions so any guidance here would be most appreciated!

[Lee B]

Based on what I have read an SMLLC  is a reporting entity because the SMLLC was created by the state,

whereas a SP is merely registering a "dba" and therefore is not a reporting entity.

The fact that the SMLLC is an entity disregarded by the IRS and is filing on Schedule C isn't of any significance in this context.

The problem with all of the questions on this thread is that very few if any of us is an attorney

and all of these questions are really "legal questions"

Please don't rely on anything I have said, it's all my personal opinion.

[JohnH]

On 8/12/2024 at 10:34 PM, Pacun said:

Has anyone filed for a client or own company already? If not, when do you think you will file? 

I have two filing requirements.  Filed the first one last week.  It took about 15  minutes because I took the time to look up a couple of things that weren't immediately obvious.  I expect the second one to take 5 minutes or so.  

An entity with a single Beneficial Owner isn't very complicated. But if there are multiple owners, or non-owners who nevertheless must be listed, I think it could get more complicated.  One suggestion - be sure to have an electronic copy of your drivers license handy.  An upload of the D/L or another acceptable form of ID is required to complete the listing.