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Is Filing BOI Practice of Law?

Published in Beneficial Ownership Reporting 4 mins read

No, generally, the act of filing Beneficial Ownership Information (BOI) is not considered the practice of law, particularly when it involves straightforward submissions.

The process of filing Beneficial Ownership Information (BOI) under the Corporate Transparency Act (CTA) is primarily an administrative task. While it requires an understanding of the regulations, the actual submission of information to the Financial Crimes Enforcement Network (FinCEN) is typically seen as a compliance function rather than legal representation or advice.

Understanding the Distinction: Filing vs. Legal Advice

The key distinction lies between performing a ministerial act, such as data entry and submission, and providing legal interpretation or advice.

  • Ministerial/Administrative Task: For most entities, BOI reporting involves collecting readily available information (names, addresses, dates of birth, identification numbers) and inputting it into a government form. This is similar to preparing and filing tax returns or other regulatory compliance documents. It has been observed that the majority of these filings are straightforward, and the associated risk does not typically place them into the realm of unauthorized practice of law. In fact, no state has yet designated providing BOI services as unauthorized practice.
  • Practice of Law: The practice of law involves applying legal principles to specific factual situations, interpreting laws, drafting legal documents that create or affect legal rights, representing clients in legal proceedings, or giving legal advice on complex matters that require legal judgment.

When BOI-Related Activities Might Border on Legal Practice

While the simple act of filing BOI is not typically legal practice, there are scenarios where activities related to BOI might require legal expertise or cross into the practice of law:

  • Complex Ownership Structures: Determining beneficial ownership for highly complex or convoluted ownership structures, especially those involving trusts, layered entities, or foreign jurisdictions, may require legal analysis and interpretation of the CTA regulations.
  • Legal Interpretation and Advice: Advising on whether a particular entity or individual qualifies as a "reporting company" or a "beneficial owner" under the CTA's specific definitions, especially in ambiguous situations, can constitute legal advice.
  • Mitigation of Legal Risks: Counseling clients on how to structure ownership to comply with the CTA while minimizing potential legal risks, or advising on the legal implications of non-compliance, falls within the scope of legal practice.
  • Responding to Legal Inquiries: Representing a client in response to an inquiry or enforcement action from FinCEN or other authorities regarding their BOI filing.

Who Can Assist with BOI Filings?

Many professionals can assist with BOI filings, depending on the complexity:

Professional Type Role in BOI Filings
Accountants (CPAs) Often assist with data compilation and form submission, leveraging their familiarity with client financial structures.
Business Service Providers Companies specializing in business formation or compliance services may offer BOI filing as a standard administrative task.
Lawyers Essential for complex ownership structures, legal interpretation, and advising on compliance strategies or legal risks.
Client Directly Many small businesses can file their own BOI reports directly with FinCEN.

Practical Considerations

For most businesses, particularly small and medium-sized enterprises with straightforward ownership, the process of gathering information and submitting the BOI report is a compliance task that can be handled by various professionals or even the business owner directly. However, if there is any doubt about who qualifies as a beneficial owner, what information must be reported, or the legal ramifications of specific ownership arrangements, seeking advice from a qualified attorney is prudent.

The Corporate Transparency Act aims to create a comprehensive database of beneficial ownership information to combat illicit finance. Understanding its requirements is crucial for compliance. More information can be found on FinCEN's official website: FinCEN - Beneficial Ownership Information Reporting.