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Federal Register / Vol. 86, No. 233 / Wednesday, December 8, 2021 / Proposed Rules
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before, FinCEN assumes for purposes of estimating costs to small businesses that all reporting companies are small businesses. Such a general descriptive statement on the number of small businesses to which the rule would apply is specifically permitted under the RFA, when, as here, greater quantification is not practicable or reliable.183 FinCEN has made this assumption in part to ensure that its IRFA does not underestimate the economic impact on small businesses.
FinCEN solicits comment on whether there is a more precise way to estimate the number of small businesses that will meet the definition of reporting company with exemptions considered.
In defining small organization, the RFA generally defines it as any not-forprofit enterprise that is independently owned and operated and is not dominant in its field.184 FinCEN
anticipates that the proposed rule would not affect small organizations, as defined by the RFA because the CTA
exempts any organization that is described in section 501c of the Internal Revenue Code of 1986
determined without regard to section 508a of such Code and exempt from tax under section 501a of such Code, and because the proposed rule incorporates this exemption.185
Therefore, any small organization, as defined by the RFA, would not be a reporting company.
In defining small governmental jurisdictions, the RFA generally defines it as governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.186 FinCEN does not anticipate at this time that the proposed rule would directly affect any small governmental jurisdictions, as defined by the RFA. The CTA exempts entities that exercise governmental authority on behalf of the United States or any such Indian Tribe, state, or political subdivision from the definition of reporting company, and the proposed rule would incorporate verbatim the CTAs exemption language.187
Therefore, small governmental jurisdictions would be uniformly exempt from reporting pursuant to the proposed rule. FinCEN is aware that 183 The RFA provides that an agency may provide a more general descriptive statement of the effects of a proposed rule if quantification is not practicable or reliable. 5 U.S.C. 607.
184 5 U.S.C. 6014.
185 31 U.S.C. 5336a11xixI, and proposed 31
CFR 1010.380c2xix.
186 5 U.S.C. 6015.
187 31 U.S.C. 5536a11iiII and proposed 31
CFR 1010.380c2ii.

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certain small governmental jurisdictions may be among the state and local authorities that incur costs as they address questions on the BOI reporting rule. FinCEN does not have adequate information to estimate these possible burdens. As noted above, FinCEN
would take all possible measures to minimize the costs associated with questions from the public directed at state and local government agencies and offices. In addition, FinCEN specifically solicits comments that discuss, and if possible estimate, what those costs may be, what types of small governmental jurisdictions could expect to face such costs, whether small governmental jurisdictions may face costs that are different in kind from those which larger jurisdictions may face, and how FinCEN could mitigate the burden on small governmental jurisdictions.
iii. Compliance Requirements FinCEN recognizes that the proposed rule would impose costs on small entities to comply with the BOI
reporting requirements. These costs could include: 1 Gathering relevant BOI for both initial and updated BOI
reports; 2 hiring or utilizing compliance, legal, or other resources for expert advice on filing requirements;
and 3 training of personnel to file the report. Possible costs of the reporting requirement are also discussed in the ANPRM comments from representatives of the small business community. One comment noted that optimizing the implementation process of the proposed rule is the most important step that FinCEN can take to reduce compliance costs for small business owners. This commenter stated that the costs to businesses of reporting the name, date of birth, address, and government ID
number of a companys owner are incredibly low, citing a UK
Government study on beneficial ownership reporting 188 and assuming that the United States will have a similar experience. However, the commenter stated that making the filing process modern, efficient, and integrated with state and Tribal incorporation practices would ensure a negligible compliance cost for businesses. The comment emphasized that the best opportunity to minimize small business compliance cost would be to integrate the BOI filing as 188 FinCEN cites to the UK study within this NPRM. See United Kingdom Department for Business, Energy & Industrial Strategy, Review of the Implementation of the PSC Register, March 2019, p. 16, available at https assets.publishing.
service.gov.uk/government/uploads/system/
uploads/attachment_data/file/822823/reviewimplementation-psc-register.pdf.

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seamlessly as possible into existing state-level incorporation processes. The comment also noted that technology, such as pre-verifying submitted information and requiring electronic filing, would minimize business costs during filing. A separate comment supported similar recommendations, stating that to reduce the cost of compliance for small businesses, FinCEN could collaborate with authorities in all 50 states to integrate the FinCEN filing process into existing corporate formation and registration processes; verify data as it is entered in the system; provide plenty of opportunities to learn about the BOI
reporting requirement; and create a searchable hub of information on the requirements. An additional comment noted that using familiar processes with minimal burdens would protect small businesses; the same comment also stated that FinCEN should conduct a small business impact analyses of the proposed regulation.
FinCEN did consider an alternative scenario in which reporting companies would submit BOI to their state authority in the Executive Orders 12866
and 13563 section above. Ultimately, FinCEN decided not to propose this alternative. FinCEN would strive to minimize costs by ensuring that small businesses are aware of the reporting requirement. Table 9 below illustrates how a reduction in the time burden for reporting the required information would decrease costs for reporting companies.
Another comment stated that the reporting requirements would create significant unintended consequences with new burdens and complexity for nearly 4.9 million American small businesses, resulting in an additional $5.7 billion in regulatory paperwork.189
The comment further stated that the reporting requirement is not necessary because the information is already collected and proposed that a simple alternative would be to allow FinCEN to review information provided to the IRS
in tax filings. To the extent that similar information may be reported to the IRS, the disclosure of taxpayer information is limited by statute, and the IRS generally does not have the authority to disclose such information for the purposes specified in the CTA.
As noted previously, FinCEN
estimates that small businesses across multiple industries would be subject to these requirements. Assuming that all reporting companies are small businesses, the burden hours for filing 189 The comment does not provide the sources for these estimates.

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