Recently, the New Jersey Supreme Court’s Committee on the Unauthorized Practice of Law issued a letter to the New Jersey Society of CPAs, providing some much-needed guidance on whether Certified Public Accountants (CPAs) and Enrolled Agents (EAs) in the state can prepare and file the FinCEN Beneficial Ownership Information Reports under Corporate Transparency Act.
The letter identifies two critical issues:
- First, whether providing guidance and filing BOI Reports constitutes practicing law under New Jersey's definition.
- Second, whether allowing nonlawyers to engage in this activity serves the public interest or requires protection.
On the first issue, the Committee determines that filing BOI Reports falls within New Jersey's broad definition of practicing law, which encompasses tasks requiring legal knowledge, training, skill, and ability, as per the functional definition adopted by the New Jersey Supreme Court In re Jackman, 165 N.J. 580, 586 (2000).
However, the Committee explores whether public protection can be ensured without restricting service to lawyers. In re Opinion No. 26 of the Committee on the Unauthorized Practice of Law, 139 NJ. 323,340 (1995).
On the second issue, the committee lists that Incidental use of legal knowledge while providing a nonlegal service does not transform the service into the practice of law. Cf. Auerbach v. Wood, 142 NJ. Eq. 484, 485-86 (E. & A. 1948). NJ Supreme Court emphasizes addressing overlaps between professional disciplines to avoid arbitrary classifications. For instance, licensed real estate brokers and salespersons may craft contracts for the sale of residential real estate, a task that is the practice of law, provided certain conditions, including an attorney-review clause in the contract, are met New Jersey State Bar Ass’n v. New Jersey Ass’n of Realtor Bds., 93 N.J. 470, 475-76 (1983).
The Committee emphasizes attorney necessity based on filing complexity and potential legal ramifications. For instance, straightforward scenarios such as single-owner limited liability companies typically require basic reporting that can be adequately handled by a licensed CPA or Enrolled Agent without legal intervention. This distinction not only aims to safeguard the public against errors in complex filings but also acknowledges potential cost savings for entities in simpler cases. Further, CPAs are required under the AICPA Code (ET §0.300.060.04) & New Jersey’s regulations (13:29-3.3) to inform clients when a situation exceeds their competence, necessitating consultation or referral to maintain professional standards and competence.
Therefore, the letter concludes as follows on the second issue:
- The Committee explains that CPAs (or EAs) must explicitly inform clients about the potential advisability of consulting with an attorney. This requirement extends beyond merely suggesting legal counsel as beneficial; it mandates that CPAs recognize and advise clients when a filing complexity warrants the involvement of legal expertise.
- The committee restricts the provision of assistance for submitting BOI reports in New Jersey to attorneys, CPAs, and EAs, although Businesses can file directly but must engage qualified professionals if they opt for third-party assistance.
Since the Corporate Transparency Act (CTA) is new and there may be potential legal developments, the Committee reserves the right to modify or update its guidance in response to ongoing court cases and evolving circumstances affecting public interest considerations.
OlenderFeldman LLP recommends the use of legal counsel to assist with CTA BOI reporting requirements for entities with more complicated considerations and to assess whether a business falls under one of the CTA’s 23 exemptions. OlenderFeldman LLP offers a new platform product to assist clients with such assessments, supplemented by its ordinary legal advisory services.
For more information about the CTA BOI reporting offerings at OlenderFeldman LLP, please contact Craig D. Bronsnick at .
For any questions regarding the appropriateness of services by CPAs or EAs for BOI reporting purposes, please contact Hrideja Shah at .
