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In 2021, the U.S. Congress passed the Corporate Transparency Act, a bipartisan effort aimed at curtailing illicit financial activities facilitated through opaque corporate structures.
This year, the act’s requirement for companies to report beneficial ownership information—referred to as BOI—is set to impact businesses across Indiana. While intended to enhance transparency, the rollout has inadvertently exposed Hoosier companies to new risks, including fraud.
The CTA mandates that companies disclose the identities of their “beneficial owners,” who ultimately own or control the business. This measure aims to prevent criminals from using shell companies to conceal unlawfully obtained assets. However, the implementation phase has been fraught with challenges, not least of which is the emergence of related scams.
Not only are the new BOI reporting requirements confusing for Hoosier business owners, but scams have also started appearing in our market. Fraudulent forms that mimic official documents are being sent out to unsuspecting business owners, asking them to submit information and sometimes a fee.
These scams often involve communications that appear to come from a non-existent “US Business Regulations Department” asking for personal information and money.
Tom Bayer, a partner at the Indianapolis office of Chicago-based CPA firm Sikich, warns, “These notices look legitimate, which is worrying. Not only can the fee be a financial hit, but the personal information provided is also valuable to these bad actors. The best course of action is to discard these notices immediately.”
Amid these challenges, local professionals are seeking to delay the enforcement of these regulations. Kyle Simmerman, managing partner at Indianapolis-based accounting firm BGBC and chair-elect of the Indiana CPA Society, expressed concerns about the readiness of businesses to comply with these abrupt changes.
“Our firm, along with others in the field, are cautious about how best to assist clients with this reporting,” Simmerman said. “Proper reporting is important and is a burden for our clients who are not the target of the mandate but are required to report. The process has been made complex, and with the current scams, it’s best to proceed with caution. We are advising our clients they should discuss this reporting with their legal counsel.”
Furthermore, Simmerman added, “The introduction of BOI reporting requirements has been anything but smooth. As professionals, we must ensure our clients navigate these murky waters without falling prey to fraudsters masquerading as government officials.”
The Indiana CPA Society, along with the American Institute of CPAs and all 54 state CPA societies, has signed a letter requesting that the Financial Crimes Enforcement Network delay enforcement of the BOI mandates.
This request comes in the wake of a March 1 court ruling deeming the Corporate Transparency Act unconstitutional for members of the National Small Business Association as of that date—although the requirement remains for other businesses.
The letter argues for a suspension of all enforcement actions until one year after the resolution of ongoing court cases and highlights the burdensome nature of the requirements, especially for small businesses that are expected to comply within just 30 days.
As the legal battles continue, with significant implications for compliance timelines and enforcement, businesses are urged to stay informed through reliable resources. FinCEN’s Small Entity Compliance Guide and the frequently asked questions on its website are valuable tools for navigating the reporting requirements.
In addition, Indiana Secretary of State Diego Morales has set up a dedicated page on the Indiana business services online portal (inbiz.in.gov/BOI) to help businesses understand their obligations under the CTA and avoid scams.
As Indiana’s business community grapples with these new regulatory challenges, the call for clearer guidelines and a more phased implementation is growing louder. By pushing for delays and spreading awareness of potential frauds, professional societies like the Indiana CPA Society are playing a crucial role in protecting local businesses from both financial and informational risks. The hope is that, with continued advocacy and education, Hoosier companies can navigate these changes safely and effectively.•
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Kincaid is president and CEO of the Indiana CPA Society, a statewide professional association representing nearly 7,000 CPAs and accounting professionals in Indiana.
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