109OAG32 ( 2024 )

32 [109 Op. Att’y
ACCOUNTANTS
UNAUTHORIZED PRACTICE OF LAW – BENEFICIAL OWNERSHIP
INFORMATION REPORTING – WHETHER ASSISTANCE BY A
CERTIFIED PUBLIC ACCOUNTANT WITH THE BENEFICIAL
OWNERSHIP INFORMATION REPORTING REQUIREMENT OF
THE CORPORATE TRANSPARENCY ACT WOULD
CONSTITUTE THE UNAUTHORIZED PRACTICE OF LAW
May 8, 2024
Jan L. Williams, Ph.D., CPA
Chair, State Board of Public Accountancy
Christopher E. Dorsey
Executive Director, State Board of Public Accountancy
In 2021, Congress enacted the Corporate Transparency Act
(the “Transparency Act” or the “Act”) to help law enforcement
investigate money laundering and other illicit activity conducted
through shell companies. The Act will require millions of
corporations and limited liability companies to identify their
“beneficial owners” to the Financial Crimes Enforcement Network
(“FinCEN”), a unit in the U.S. Department of the Treasury. Each
“reporting company” covered by the Act must file a Beneficial
Ownership Information Report (“BOIR”) with FinCEN by a
certain deadline. Many legal entities thus will need to determine
whether they are “reporting companies” and, if they are, will need
to complete and submit a BOIR.
On behalf of the State Board of Public Accountancy, you
requested an official opinion of the Attorney General analyzing
whether, and under what circumstances, a certified public
accountant (“CPA”) who prepares a BOIR for a client or assists a
client with BOIR preparation would be engaged in the
unauthorized practice of law. You suggested that businesses,
especially small businesses, may seek help from their regular CPA
in complying with the Act. But, if BOIR preparation or advice is
“the practice of law,” then nonlawyers may not provide that service
without attorney supervision. You thus asked for “guidance with
respect to what CPA activities relating to BOI reporting would and
would not constitute unauthorized practice of law.”1
1
We received comments on this opinion request from the Maryland
Association of Certified Public Accountants (“MACPA”). Letter from
Rebekah Olson, CPA, Executive Director, MACPA, to Office of the
Gen. 32] 33
In Maryland, the authority to define “the practice of law” rests
with the courts, which have developed the definition on a case-by-
case basis. To answer your question, then, we must attempt to
predict how the courts would evaluate different degrees of CPA
involvement in this area. Although we cannot draw bright lines or
address every hypothetical situation, we will offer our best
guidance consistent with precedent.
In our opinion, to take the easier part of your question first, a
CPA clearly may provide clients with general information about
the BOIR requirement that is not particularized to any specific
client’s situation. Similarly, if a client were to determine for itself
that it is a “reporting company” covered by the Act and provide its
CPA with a list of its beneficial owners, the CPA could perform the
ministerial tasks of gathering the necessary contact information for
those beneficial owners, filling out the BOIR form, and filing it
with FinCEN.
In addition, although the question is closer, we think there will
also be many situations where a CPA can help a client determine
whether it is a “reporting company” or assist a client with
identifying its beneficial owners. More specifically, we think
CPAs may provide a client with the instructions and guidance
FinCEN has published for completing the BOIR form; walk the
client through FinCEN’s instructions (which are designed for
nonlawyers); define terms in the instructions that are within
common knowledge for a layperson or CPA; and help the client
answer factual questions from the client’s records or the CPA’s
own knowledge.
But a CPA who goes beyond those types of activities is at
much greater risk of engaging in unauthorized law practice. As
discussed in greater detail below, to the extent a CPA’s BOIR
assistance requires the knowledge, skills, and training of a
lawyer—such as application of the general legal principles of
statutory or contract interpretation, analysis of legal precedent, or
identifying legal issues in a client-provided fact pattern (so-called
“issue spotting”)—that assistance may violate the prohibition on
unauthorized practice of law.2
Attorney General (Mar. 1, 2024) (“MACPA Comments”). We thank
MACPA for its comments, which we have considered in preparing this
opinion.
2
Our analysis is limited to BOIR preparation or assistance by CPAs
who are not also attorneys. We do not opine on any other area of CPA
34 [109 Op. Att’y
I
Background
A. The Unauthorized Practice of Law
Restrictions on who may practice law have a long history in
Maryland. Starting in 1715, a series of acts of the General
Assembly required courts, and then boards of attorneys appointed
by the courts, to examine would-be lawyers for competence and
character. William H. Adkins, II, What Doth the Board Require of
Thee?, 28 Md. L. Rev. 103, 104-05 (1968). But these statutes only
regulated attorneys’ right to appear in court; law practice outside
of court remained unregulated. See Md. Ann. Code, Art. 10, §§ 1-
16 (1888); see also Barlow F. Christensen, The Unauthorized
Practice of Law: Do Good Fences Really Make Good Neighbors—
Or Even Good Sense?, 5 Am. Bar Found. Res. J. 159, 180-81, 186-
87 (1980) (explaining that the same was true for most states until
the early twentieth century).
The General Assembly broadened the unauthorized practice
prohibition in 1898, when it authorized contempt sanctions “for
assuming to be any attorney . . . and acting as such without
authority” regardless of the setting. 1898 Md. Laws, ch. 31. Two
years later, the Legislature made it a misdemeanor for a non-Bar
member to receive payment for “advice or services as an attorney
at law.” 1900 Md. Laws, ch. 699.
To clarify the scope of the prohibition, the General Assembly
in 1908 enacted a definition of law practice: “[A]ny person who
shall give any legal advice, represent any person in the trial of any
case at law or in equity, or prepare any written instrument affecting
the title to real estate, for pay or reward,” would be deemed to be
practicing law. 1908 Md. Laws, ch. 638. Over the following
decades the Legislature would make minor adjustments to this
definition. See, e.g., 1961 Md. Laws, ch. 456 (adding estate
administration advice on Orphans’ Court matters to the definition
of law practice).
activity or on whether other types of licensed professionals, or
nonprofessionals, may provide BOIR assistance to the same extent as
CPAs. Of course, CPAs who are also Maryland Bar members may
practice law in Maryland to the extent allowed by the two professions’
ethical rules.
Gen. 32] 35
In 1969, however, the Supreme Court of Maryland3 held that
the regulation of the practice of law, and more specifically “the
determination of what constitutes the practice of law,” is vested in
the Judicial Branch. Public Serv. Comm’n v. Hahn Transp., Inc.,
253 Md. 571, 583 (1969). The Court has rested this principle both
on the historical understanding that attorneys are “officers of the
court,” and on the recognition that in our adversarial system, the
Judiciary cannot perform its functions without “a vigorous,
honorable and qualified bar” to present and develop cases.
Attorney General v. Waldron, 289 Md. 683, 693-96 (1981). But
the power the Court recognized in Hahn Transportation extends
beyond the courthouse; the Court there held that appearance before
quasi-judicial administrative agencies was also the practice of law
subject to judicial regulation. 253 Md. at 580-81.
The Court in Hahn Transportation did acknowledge the
validity of legislation implementing and supporting judicial
authority over the legal profession. Hahn Transp., 253 Md. at 583;
see also Waldron, 289 Md. at 698. For example, the General
Assembly has continued to enact mechanisms to enforce the
unauthorized-practice prohibition. Although at one time bar
associations could seek injunctive relief against unauthorized
practice, see 1961 Md. Laws, ch. 217, only the Office of the
Attorney General and the Attorney Grievance Commission’s
Office of Bar Counsel now have that authority, Md. Code Ann.,
Bus. Occ. & Prof. (“BO&P”) § 10-406. Unauthorized practice of
law also remains a misdemeanor punishable by fine and/or
imprisonment. BO&P §§ 10-601, 10-606.
The courts have continued to cite the General Assembly’s
definition of the practice of law, though they have not treated it as
binding. See, e.g., Attorney Grievance Comm’n v. Jackson, 477
Md. 174, 200 n.11 (2022). The definition, now codified at
§ 10-101(h) of the Business Occupations and Professions Article,
states:
(1) “Practice law” means to engage in any of
the following activities:
(i) giving legal advice;
3
Until December 2022, the Supreme Court of Maryland and the
Appellate Court of Maryland were known as the Court of Appeals and
the Court of Special Appeals, respectively. This opinion uses the courts’
current names throughout for consistency.
36 [109 Op. Att’y
(ii) representing another person before a
unit of the State government or of a
political subdivision; or
(iii) performing any other services that the
Supreme Court of Maryland defines as
practicing law.
(2) “Practice law” includes:
(i) advising in the administration of probate
of estates of decedents in an orphans’ court
of the State;
(ii) preparing an instrument that affects title
to real estate;
(iii) preparing or helping in the preparation
of any form or document that is filed in a
court or affects a case that is or may be filed
in a court; or
(iv) giving advice about a case that is or
may be filed in a court.
In general, though, the Maryland courts since 1969 have
developed the definition of “practice of law” in a common-law
fashion. Rather than “craft an all-encompassing definition,” the
courts will “look at the facts of each case and determine whether
they ‘fall within the fair intendment of the term’” “practice of law.”
E.g., Jackson, 477 Md. at 200-01 (quoting Attorney Grievance
Comm’n v. Hallmon, 343 Md. 390, 397 (1996)).
The prohibition on unauthorized practice of law aims to
protect both the courts and the public from incompetent or
unethical would-be practitioners. See, e.g., In re R.G.S., 312 Md.
626, 638 (1988); see also, e.g., Restatement (Third) of the Law
Governing Lawyers § 4 cmt. b (Am. Law Inst. 2000). Because
lawyers are subject to rules governing their competence and ethics,
courts can rely on lawyers’ assertions. See Susan B. Schwab, Note,
Bringing Down the Bar: Accountants Challenge Meaning of
Unauthorized Practice, 21 Cardozo L. Rev. 1425, 1433 n.39
(2000). “Law practice” by individuals who lack a lawyer’s training
and ethical duties thus harms not only clients but also the
administration of justice more generally. See 56 Opinions of the
Attorney General 5, 8 (1971); 44 Opinions of the Attorney General
443, 444-45 (1959). So even a client’s free and fully informed
consent cannot authorize a nonlawyer to practice law on their
behalf. See Turkey Point Prop. Owners’ Ass’n v. Anderson, 106
Md. App. 710, 717-18 (1995).
Gen. 32] 37
That said, as scholars have recognized, it can sometimes be
difficult to define, consistently and coherently, what activities
(outside of litigation, and activity ancillary to litigation) constitute
“the practice of law.” See, e.g., Deborah L. Rhode, Policing the
Professional Monopoly: A Constitutional and Empirical Analysis
of Unauthorized Practice Prohibitions, 34 Stan. L. Rev. 1, 81-85
(1981); Adam J. Smith, Unauthorized Practice of Law and CPAs:
A Law of the Lawyers, by the Lawyers, for the Lawyers, 23 U. Fla.
J.L. & Pub. Pol’y 373, 381-85 (2012). This question is especially
difficult considering that the practice of many other professions
involves applying, or at least understanding, aspects of law. See,
e.g., Pamela A. McManus, Have Law License; Will Travel, 15 Geo.
J.L. Ethics 527, 541-42 (2002). Certified public accountancy is one
such profession.
B. Certified Public Accountants
Accountants, like lawyers, offer a wide variety of services.
These services most often involve the collection, organization, and
validation of financial information. See, e.g., Comprehensive
Accounting Serv. Co. v. Maryland State Bd. of Pub. Accountancy,
284 Md. 474, 478 (1979); Accountant’s Soc’y of Va. v. Bowman,
860 F.2d 602, 604-05 (4th Cir. 1988). But the work of accountants
“generally go[es] beyond simple auditing and bookkeeping” and
may include, for example, “financial management and planning
advice.” 13 N.Y. Jur. 2d Businesses & Occupations § 181 (Apr.
2024 update).
The definition of certified public accountancy is narrower.4
In Maryland, CPAs are licensed and regulated by the State Board
of Public Accountancy under the Maryland Public Accountancy
Act, Title 2 of the Business Occupations and Professions Article.
Only a CPA who has met the “stringent educational, experience
and other eligibility requirements” for licensure, Comprehensive
Accounting, 284 Md. at 476, may “practice certified public
accountancy,” BO&P § 2-301. The “practice [of] certified public
accountancy” is defined as:
4
The Maryland Public Accountancy Act expressly preserves the right
of non-CPAs to provide “bookkeeping and accounting services” as long
as those services fall outside the definition of certified public
accountancy in BO&P § 2-101(m). See BO&P § 2-102(a)(3). And
certain non-CPAs may prepare tax returns. BO&P §§ 21-102(b),
21-301.
38 [109 Op. Att’y
(1) conducting an audit, review, or
compilation of financial statements;
(2) conducting any examination, review, or
agreed-upon procedures engagement to be
performed in accordance with the Statements
on Standards for Attestation Engagements
issued by [the American Institute of Certified
Public Accountants]; or
(3) providing a written certificate or opinion
offering positive or negative assurance or full
or limited assurance on the correctness of the
information or on the fairness of the
presentation of the information in:
(i) a financial statement;
(ii) a report;
(iii) a schedule; or
(iv) an exhibit.
BO&P § 2-101(m). To summarize at the expense of some nuance,
then, the special domain of CPAs is to provide, for the benefit of
third parties, a degree of written assurance on the fairness or
correctness of financial statements or other information provided
by their clients.5
5
An “audit” produces an opinion on the correctness of the
information, or the fairness of the presentation of the information, in
financial statements. 84 Opinions of the Attorney General 3, 5, 14
(1999); 66 Opinions of the Attorney General 190, 190 (1981). A
“review” produces a “limited assurance” that the accountant is not aware
of any material modifications that must be made to the financial
statements to conform to generally accepted accounting principles. 84
Opinions of the Attorney General at 6, 15; 66 Opinions of the Attorney
General at 193-94. A “compilation” ordinarily involves no assurance at
all, 84 Opinions of the Attorney General at 5, and so the Public
Accountancy Act allows non-CPAs to prepare compilations, but only
with certain disclaimers. BO&P § 2-102(a)(3)(iii)(2). Thus, the
preparation of compilations without disclaimers is limited to CPAs. See
id.; BO&P § 2-101(m)(1). Finally, the American Institute of Certified
Public Accountants (“AICPA”) Statements on Standards for Attestation
Engagements, referenced in BO&P § 2-101(m)(2), govern the
preparation of opinions or conclusions about subject matter other than
financial statements, such as “a schedule of investment returns, the
effectiveness of an entity’s controls over the security of a system, or a
statement of greenhouse gas emissions.” AICPA, U.S. Attestation
Gen. 32] 39
CPAs can also offer services outside of this exclusive
bailiwick, unless prohibited by some other law or their own
professional code of conduct. See COMAR 09.24.01.06C-E
(establishing ethical limits on CPAs’ other services). The
American Institute of Certified Public Accountants (“AICPA”)
promulgates standards for various practice areas other than core
CPA practice, such as management consulting and personal
financial planning. AICPA, Statement on Standards for Consulting
Services No. 1 (1991); AICPA, Statement on Standards in Personal
Financial Planning Services (2015).
Relevant here, a practice has apparently developed of CPAs
helping clients comply with certain federal statutory reporting
requirements. See MACPA Comments at 2. CPAs have long
assisted clients with tax return preparation, see, e.g., Erwin N.
Griswold, A Further Look: Lawyers and Accountants, 41 A.B.A.
J. 1113, 1115-16 (1955), as Maryland law expressly recognizes, see
BO&P § 21-102(b)(1) (exempting CPAs from State licensing
requirements for tax return preparers). A CPA practice of assisting
with other form-based federal reporting and disclosure
requirements may have evolved by analogy to tax practice. For
example, according to MACPA, CPAs help their clients comply
with federal requirements to disclose foreign bank accounts and
interests in foreign corporations. See MACPA Comments at 2;
FinCEN, BSA Electronic Filing Requirements for Report of
Foreign Bank and Financial Accounts (Jan. 2017) (“FBAR
Instructions”); IRS, Instructions for Form 5471: Information
Return of U.S. Persons with Respect to Certain Foreign
Corporations (Jan. 2024 revision). Another new area where some
CPAs are considering offering services is the beneficial ownership
disclosure requirement of the Corporate Transparency Act.
C. The Corporate Transparency Act
Congress enacted the Corporate Transparency Act as part of
the National Defense Authorization Act for Fiscal Year 2021. Pub.
L. No. 116-283, tit. LXIV, 134 Stat. 3388, 4604 (2021) (codified
at 31 U.S.C. § 5336). The Act’s purpose was to help law
enforcement pursue bad actors who use shell companies—often
many layers of them—to conceal their illicit activities and their
Standards—AICPA (Clarified) §§ .01, .06 (2023). Originally, non-
CPAs in Maryland could provide all of these services except audits. See
84 Opinions of the Attorney General at 20. But later amendments
expanded the definition of CPA practice to include reviews,
compilations, and attestations. See 2011 Md. Laws, ch. 229; 2015 Md.
Laws, ch. 110.
40 [109 Op. Att’y
movement of funds and assets. See id. § 6402. Congress sought to
pierce the shells by “providing for the collection of beneficial
ownership information for corporations, limited liability
companies, or other similar entities.” Id.6
Compliance with the Act involves two steps. The first step is
for an entity to determine whether it is subject to the Act. The Act’s
requirements apply to any “reporting company.” See 31 U.S.C.
§ 5336(b)(1). Every corporation, LLC, or other entity that is
formed by filing with a state Secretary of State or analogous office,
as well as every foreign corporation, LLC, or other entity that
registers to do business in the United States through such an office,
is presumptively a reporting company. Id. § 5336(a)(11)(A).
The Act then sets out a number of exemptions from “reporting
company” status (and thus from the Act’s reporting requirements).
Id. § 5336(a)(11)(B). Most of the exemptions are for entities
regulated under other provisions of state or federal law, such as
securities issuers, banks, insurance companies, public utilities, and
governmental units. Id. § 5336(a)(11)(B)(i)-(xx). Another
exemption applies to entities that have more than twenty full-time
employees, a physical office, and more than $5 million in gross
sales, all in the United States. Id. § 5336(a)(11)(B)(xxi).
Conversely, an entity is also exempt if it is inactive; to qualify as
inactive an entity must have engaged in no significant recent
financial transactions, must have no assets, and must meet certain
other requirements. Id. § 5336(a)(11)(B)(xxiii). Wholly owned
6
On March 1, 2024, the United States District Court for the Northern
District of Alabama held that the Transparency Act is unconstitutional
because it exceeds the enumerated powers of Congress. National Small
Bus. United v. Yellen, No. 5:22-cv-1448-LCB, 2024 WL 899372, at *21
(N.D. Ala. Mar. 1, 2024). The court permanently enjoined the federal
government from enforcing the Act, but only against the plaintiffs in that
case: the National Small Business Association and one individual. Final
Judgment, National Small Bus. United, 2024 WL 899372 (5:22-cv-1448-
LCB), ECF No. 52; Complaint ¶¶ 11-14, National Small Bus. United,
2024 WL 899372 (5:22-cv-1448-LCB), ECF No. 1. The United States
has appealed the decision. Notice of Appeal, National Small Bus.
United, 2024 WL 899372 (5:22-cv-1448-LCB), ECF No. 54. And
FinCEN has stated that it will continue to enforce the Act against all
entities other than the plaintiffs in the Alabama litigation and the plaintiff
business association’s members. FinCEN, Updated: Notice Regarding
National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D.
Ala.) (Mar. 4, 2024), https://www.fincen.gov/news/news-releases/
updated-notice-regarding-national-small-business-united-v-yellen-no-
522-cv-01448.
Gen. 32] 41
subsidiaries of exempt entities are also exempt. Id. § 5336(a)(11)(B)(xxii);
31 C.F.R. § 1010.380(c)(2)(xxii).
If an entity is a “reporting company” under the Act, the second
compliance step is to identify the company’s beneficial owners.
Only individuals can be beneficial owners. See 31 U.S.C.
§ 5336(a)(3)(A). An individual can be a beneficial owner of a
reporting company in one (or both) of two ways. First, an
individual who “exercises substantial control” over a reporting
company is a beneficial owner of the company. Id. Second, an
individual who owns or controls at least 25% of the ownership
interests in a reporting company is also a beneficial owner. Id.7
FinCEN’s implementing regulations further flesh out the
definition of “beneficial owner.” As to the first type of beneficial
ownership—“substantial control”—an individual has substantial
control over a company if they are a senior officer, if they have
authority to appoint or remove a senior officer or majority of the
board, if they “direct[], determine[], or [have] substantial influence
over” important decisions of the company, or if they have “any
other form of substantial control over the reporting company.” 31
C.F.R. § 1010.380(d)(1)(i). This control may be direct or indirect
(e.g., control exercised through another entity counts). Id.§ 1010.380(d)(1)(ii).
Turning to the second type of beneficial ownership—25%
ownership—an individual is a beneficial owner if they own 25% or
more of a reporting company regardless of the precise nature of
their ownership interest; stock, other forms of equity, membership
interests in LLCs, and more, all may qualify. Id.
§ 1010.380(d)(2)(i). As with the “substantial control” definition,
there is a catch-all for “[a]ny other instrument, contract,
arrangement, understanding, relationship, or mechanism used to
establish ownership.” Id. § 1010.380(d)(2)(i)(E). The regulations
also provide a mechanism to identify 25% owners for an entity with
more than one type of ownership interest. Id. § 1010.380(d)(2)(iii).
7
Certain individuals who would otherwise qualify as beneficial
owners are excluded from the definition: minors; individuals who hold
an interest as nominee or custodian on behalf of another; individuals who
are employees of a reporting company and have control of, or receive
economic benefits from, the entity only in that capacity; individuals
whose interest in the company arises only from the expectation of
inheritance; and creditors who do not otherwise meet the definition of a
beneficial owner. 31 U.S.C. § 5336(a)(3)(B).
42 [109 Op. Att’y
Once a reporting company has identified its beneficial
owners, it must file the BOIR with FinCEN. The BOIR must
include certain identifying information for each beneficial owner
of a reporting company, including name, date of birth, address, and
a copy of an identification document. 31 U.S.C. § 5336(b)(2); 31
C.F.R. § 1010.380(b)(1)(ii).8 There is no requirement to report the
reason why an individual qualifies as a beneficial owner
(substantial control, 25% ownership, or both). FinCEN, Small
Entity Compliance Guide: Beneficial Ownership Information
Reporting Requirements 16 (Version 1.1, Dec. 2023)
(“Compliance Guide”).
The deadline to file depends on when the entity was created.
Generally speaking, reporting companies created or registered after
January 1, 2024, must report within 90 days after creation or U.S.
registration; entities created or registered after January 1, 2025,
must report within 30 days after creation or registration; and
entities created or registered before 2024 must report by January 1,
2025. 31 C.F.R. § 1010.380(a)(1). Although there is no annual or
periodic reporting requirement, a company must report any
changes to its previously reported BOIR within 30 days of the
change. Id. § 1010.380(a)(2).
FinCEN must maintain this information in a secure database
and release it only to authorized requesters for the purposes
specified in the Act. 31 U.S.C. § 5336(c); see also 31 C.F.R.
§ 1010.955 (implementing regulation for data access provisions).
With limited exceptions, access is only available to law
enforcement agencies for investigatory, security, or intelligence
purposes. See 31 U.S.C. § 5336(c)(2)(B). FinCEN estimates that
some 32.6 million reporting companies will need to file BOIRs in
2024 alone. Beneficial Ownership Information Reporting
Requirements, 87 Fed. Reg. 59,498, 59,549 (Sept. 30, 2022)
(“BOIR Final Rule”).
The Act comes with criminal and civil penalties. Any person
who willfully provides, or attempts to provide, false or fraudulent
beneficial ownership information to FinCEN, or willfully fails to
report complete or updated beneficial ownership information, may
be liable for a civil penalty of up to $500 per day the violation
continues, a fine of up to $10,000, and/or imprisonment for up to
8
Reporting companies formed after January 1, 2024, must identify
both their beneficial owners and their “applicants,” meaning the
individual who actually files the documents to create the entity and the
individual who directs or controls the filing. 31 U.S.C. § 5336(b)(2)(A);
31 C.F.R. § 1010.380(b)(2)(iv), (e).
Gen. 32] 43
two years. 31 U.S.C. § 5336(h)(1), (3). All senior officers of a
reporting company are liable if the company fails to file a BOIR.
See 31 C.F.R. § 1010.380(g)(4).
To help entities comply with the Act, FinCEN has issued
guidance to accompany the BOIR form. See generally Compliance
Guide, supra. In particular, FinCEN’s Small Entity Compliance
Guide offers step-by-step instructions to help an entity determine
whether it is a “reporting company” and, if so, to identify its
beneficial owners and complete the BOIR. These instructions are
intended to “provid[e] comprehensive guidance and
communicat[e] information about the reporting requirements in
plain language.” Id. at v. To that end, the instructions distill the
various questions an entity faces under the Act into flowcharts and
yes-or-no questions with illustrative examples. See, e.g., id. at 2,
5-14, 20, 22. FinCEN also publishes answers to frequently asked
questions and other informal guidance on its website. FinCEN,
Beneficial Ownership Information: Small Business Resources,
https://www.fincen.gov/boi/small-business-resources (last visited
May 2, 2024).
Some CPA organizations believe that “[d]ue to the nature of
the CPA-client relationship, a client’s first inclination may be to
turn to their CPA for advice on [the Transparency Act] rather than
their attorney,” but note that this creates various risks—including
unauthorized practice of law risk—and recommend that CPAs
explicitly exclude BOIR services from the scope of their
engagements. AICPA Member Ins. Programs, Risk Alert:
Navigating Corporate Transparency Act/Beneficial Ownership
Reporting (2024), https://www.cpai.com/Education-Resources/my-
firm/Tax-Services/What-accounting-firms-need-to-know-about-CTA. At
least one large accounting firm has announced that it “will not
advise on or assist with the preparation of BOI reporting” due to
unauthorized law practice risk. Baker Tilly, The New Beneficial
Ownership Reporting (Sept. 20, 2023),
https://www.bakertilly.com/insights/the-new-beneficial-
ownership-reporting.
But other accounting industry commentators see the BOIR
requirement as “an opportunity for accounting professionals to
expand the scope of advisory services offered.” E.g., Thomson
Reuters Tax & Accounting, Are You Ready? The Corporate
Transparency Act Becomes Effective Jan. 1, 2024 (Oct. 19, 2023),
https://tax.thomsonreuters.com/blog/are-you-ready-the-corporate-
transparency-act-becomes-effective-jan-1-2024/. The possibility
44 [109 Op. Att’y
that some CPAs might seek to offer BOIR preparation services
prompted the Board of Public Accountancy to request this opinion.
II
Analysis
A. The Definition of “Practice of Law”
“Except as otherwise provided by law, a person may not
practice, attempt to practice, or offer to practice law in the State
unless admitted to the Bar.” BO&P § 10-601(a). An individual
who is neither a lawyer, nor acting under a lawyer’s supervision,
and who performs activities that constitute “the practice of law,” is
thus engaged in the unauthorized practice of law.9 See, e.g., Lukas
v. Bar Ass’n of Montgomery County, Md., 35 Md. App. 442, 443
(1977).
The Maryland Constitution vests the authority to define “the
practice of law” in the Judiciary. Hahn Transp., 253 Md. at 583.
However, our Office has often issued official opinions on practice-
of-law questions for the guidance of our clients and the public in
areas where the Supreme Court has not yet spoken. See, e.g., 90
Opinions of the Attorney General 101 (2005); 80 Opinions of the
Attorney General 138 (1995); 79 Opinions of the Attorney General
174 (1994). Our role, then, is to “predict, as best we can,” how the
courts would resolve your question, using case law as “our most
important guide.” 107 Opinions of the Attorney General 153, 153-
54 (2022).
Your question sought guidance on what forms of “assistance
to clients in connection with BOI reporting” and “what CPA
activities relating to BOI reporting would and would not constitute
unauthorized practice of law.” A number of activities could fall
under those headings:
(1) Informing clients generally that the
BOIR requirement exists and must be
complied with;
9
Some activities that would otherwise qualify as “practice of law”
might not be unauthorized practice of law if performed under the
supervision of an attorney. For example, a supervised law clerk may
draft court filings and perform other tasks that a nonlawyer could not
perform on their own. See, e.g., Hallmon, 343 Md. at 400. Here,
however, we have assumed that CPAs would undertake their BOIR-
related activities independently, without attorney supervision.
Gen. 32] 45
(2) Answering general client questions
about the BOIR requirement without
particularizing an answer to the client’s
individual circumstances;
(3) Directing the client to guidance
published by FinCEN;
(4) Helping a client determine whether it is
a “reporting company” that must file a
BOIR;
(5) Helping a client that is a “reporting
company” identify its beneficial
owners (and, for new entities, its
“applicants”);
(6) Once beneficial owners have been
identified, gathering the required
personal information on each
beneficial owner;
(7) Filling out the BOIR and filing it with
FinCEN.
The courts have “not endeavor[ed] to formulate a precise
definition of the practice of law.” Lukas, 35 Md. App. at 443.
Instead, they will “consider each state of facts and determine
whether it falls within the fair intendment” of the term. E.g.,
Attorney Grievance Comm’n v. Shaw, 354 Md. 636, 649 (1999)
(quoting In re Mark W., 303 Md. 1, 8 (1985)).
But case law nonetheless offers some general guidelines. “To
determine whether an individual has engaged in the practice of law,
the focus of the inquiry should ‘be on whether the activity in
question required legal knowledge and skill in order to apply legal
principles and precedent.’” E.g., Hallmon, 343 Md. at 397 (quoting
In re Discipio, 163 Ill.2d 515, 523 (1994)). After all, the practice
of law “connot[es] much more than merely working with legally-
related matters.” Attorney Grievance Comm’n v. Sperling, 459 Md.
194, 267 (2018) (quoting Mark W., 303 Md. at 19). A central
question in determining whether an activity is the practice of law,
then, is whether that activity requires a lawyer’s skills, training, and
professional judgment. See, e.g., id.; see also, e.g., Kennedy v. Bar
Ass’n of Montgomery County, 316 Md. 646, 662 (1989) (“Utilizing
legal education, training, and experience an attorney applies the
special analysis of the profession to a client’s problem.”); Hahn
Transp., 253 Md. at 585; Lukas, 35 Md. App. at 448-49; 90
Opinions of the Attorney General at 104.
46 [109 Op. Att’y
In other words, to determine whether an activity is the practice
of law, it is necessary to assess how far that activity implicates the
fundamental, basic knowledge and skills of a lawyer, which are
taught in law school, tested on the bar exam, and honed through
experience in practice.10 These fundamentals have been defined,
to some extent, by the Supreme Court of Maryland in the Rules of
Professional Conduct. They include the knowledge of substantive
legal principles appropriate to a matter, see Md. Rule 19-301.1 cmt.
1; the skills of legal research, analyzing precedent, evaluating
evidence, legal drafting, and “determining what kind of legal
problems a situation may involve” (“issue spotting”), see id. cmt.
2; and the judgment to determine the best legal means of pursuing
a client’s objectives, including making tactical decisions on the
client’s behalf where appropriate, see Md. Rule 19-301.2 cmt. 1.
The more these skills and legal knowledge are required, the more
likely an activity is the “practice of law.”
The courts and our opinions have also identified activities that
usually do require, or traditionally have been understood to require,
a lawyer’s training and skills. The bulk of Maryland precedent on
unauthorized practice involves advocacy for others before courts
and government agencies or activities ancillary to such advocacy,
including advice on advocacy proceedings, preparation of
pleadings and documents related to those proceedings, and
negotiations with adverse parties. Although the courts have
avoided stating categorical rules, such activities will typically
constitute the practice of law. See, e.g., Attorney Grievance
Comm’n v. Smith, 443 Md. 351, 368-69 (2015); 80 Opinions of the
Attorney General at 143; 65 Opinions of the Attorney General 28,
30-31 (1980); see also BO&P § 10-101(h)(1)(ii), (h)(2)(iii).
Another area that has been held to require legal training and
skill is the preparation of customized legal instruments that create
or alter legal rights, such as wills, deeds, or contracts. See, e.g.,
Lukas, 35 Md. App. at 444, 448-49 (involving a contract); Attorney
Grievance Comm’n v. Brooke, 374 Md. 155, 176-77 (2003)
(involving a will); 90 Opinions of the Attorney General at 105
(involving real estate documents); see also BO&P
§ 10-101(h)(2)(ii). These activities, too, are likely to be considered
law practice, although as always the courts will consider each case
on its own facts.
10
Maryland law defines the scope of some other professions in a
similar way. For example, the Maryland Architects Act provides that an
activity does not constitute the practice of architecture unless it “requires
education, training, and experience in architecture.” BO&P
§ 3-101(l)(1).
Gen. 32] 47
The Supreme Court of Maryland has also said, generally, that
“advising clients by applying legal principles to the client’s
problem is practicing law.” Kennedy, 316 Md. at 663; see also id.
at 666 (“[T]he very acts of interview, analysis and explanation of
legal rights constitute practicing law in Maryland.”). Similarly, the
Appellate Court has stated that “[w]here trial work is not involved
but the preparation of legal documents, their interpretation, the
giving of legal advice, or the application of legal principles to
problems of any complexity, is involved, these activities are still
the practice of law.” Lukas, 35 Md. App. at 448 (quoting F.
Trowbridge vom Baur, Administrative Agencies and Unauthorized
Practice of Law, 48 A.B.A. J. 715, 716 (1962)). And the General
Assembly’s definition of practice of law includes “giving legal
advice.” BO&P § 10-101(h)(1)(i). Thus, one might argue that any
application of law to fact, for a client, is “legal advice,” and thus is
the practice of law. See, e.g., Disciplinary Counsel v. Deters, 165
Ohio St.3d 537, 541 (2021).
However, these statements by the Maryland courts should be
understood in context. They were made in cases that either
involved one of the traditional law-practice activities identified
above, see Lukas, 35 Md. App. at 445-46 (involving representation
before administrative agencies and customized contract drafting),
or involved individuals who actually held themselves out as
Maryland attorneys, see Kennedy, 316 Md. at 665-66; see also
Somuah v. Flachs, 352 Md. 241, 262 (1998) (distinguishing
Kennedy on that basis). Of course, the practice of law is not limited
to these situations, and advising clients by applying law to fact will
often qualify as law practice. But because the courts will consider
each practice-of-law case on its own facts, we do not understand
the courts’ general statements to mean that application of law to
fact will always be “legal advice” within the meaning of the
unauthorized practice prohibition. We think that the ultimate
question remains whether the particular activity at issue requires a
lawyer’s knowledge and skills, and thus comes within the “fair
intendment” of the term “practice of law.” E.g., Shaw, 354 Md. at
649.
Under that test, an activity is not “the practice of law” just
because it requires some knowledge of a particular area of law. For
example, an activity is not the practice of law when it requires no
more than the “elementary knowledge of the law” that “the
ordinary or average [layperson] may be deemed to possess.” See
Lukas, 35 Md. App at 448 (quoting R.E. Heinselman, Annotation,
What Amounts to Practice of Law, 111 A.L.R. 19, 24-25 (1937));
80 Opinions of the Attorney General at 141.
48 [109 Op. Att’y
Even activities that may require more than an ordinary
layperson’s substantive knowledge of the law, as well as
application of that knowledge to facts, may not qualify as practice
of law if they do not call for a lawyer’s training, skills, and
judgment. For example, although calculating the capital gains and
losses of a stock portfolio for tax purposes involves the application
of tax law principles to particular facts, it is not necessarily the
practice of law. See Shaw, 354 Md. at 641, 652. This could be
because, as Massachusetts’ highest court put it, an activity that is
“commonly performed by competent nonlawyer professionals”
might not be law practice. Real Estate Bar Ass’n for Mass. v.
National Real Estate Info. Servs., 459 Mass. 512, 521 (2011); cf.
Mark W., 303 Md. at 19 (holding that, for purposes of admission-
without-examination rule, work as a hearing examiner for a State
agency “in a very limited field of law” was not practice of law).
An established practice of nonlawyer involvement in an activity
may be evidence that a lawyer’s training and skills are not needed
for that activity.11
Our Office has also opined that many activities of an estate’s
personal representative do not rise to the level of “practice of law,”
such that a nonlawyer may perform them and—especially relevant
here—the staff of the office of a Register of Wills may assist with
them. See 61 Opinions of the Attorney General 738, 738-39, 740
n.1 (1976); 56 Opinions of the Attorney General 250, 251 (1971);
Md. Op. Att’y Gen. No. 76-102, at 2-3 (June 30, 1976)
(unpublished). Even though the administration of an estate
involves the application of procedural and substantive law to a
particular matter, much of the process is sufficiently
11
We understand that CPAs regularly prepare tax returns and give tax
advice to their clients, which involves the interpretation and application
of complex legal rules. See, e.g., McManus, supra, at 541-42. This
practice, by itself, does not establish that CPAs may also assist in BOIR
preparation without restrictions. You did not ask, and so we do not opine
here, about how the unauthorized practice of law prohibition interacts
with CPAs’ tax practice. But at least some aspects of CPA tax practice
are expressly authorized both by Maryland law, see BO&P
§ 21-102(b)(1), and (at least as to federal taxes) by IRS regulations, see
31 C.F.R. §§ 10.2(a)(4), 10.3(b). Also, CPAs’ tax practice activities
have a decades-long history, see, e.g., Griswold, supra, at 1115-16, and
are more closely related to CPAs’ traditional core function of verifying
and communicating financial data, see supra Part I.B; cf. 52 Opinions of
the Attorney General 244, 246 (1967) (opining that custom and practice
may be relevant to the definition of “practice of law”). None of these
arguments carry over to BOIR preparation. Thus, we do not think CPAs’
tradition of tax practice is directly relevant, one way or the other, to the
“practice of law” analysis for BOIR preparation.
Gen. 32] 49
“administrative” that “any advice given by the Register with
respect to those functions would not constitute the unauthorized
practice of law.” Md. Op. Att’y Gen. No. 76-102, at 2. This is
further indication that not every activity requiring some knowledge
of law or involving application of law to particular circumstances
is the practice of law.
We also think the courts would recognize the practical
problems with an inflexible rule that any application of law to fact
for another is law practice. Members of many recognized
professions apply law to fact in the course of their work. For
example, architects must assess (for themselves and their clients)
whether the plans for a building comply with applicable building
codes. See Annette Davis Perrochet, Architects and Engineers
§ 3:3 (June 2023 update). Electricians do the same with electrical
codes. See BO&P § 6-101(j) (defining a “master electrician” as
someone who has the ability to provide electrical services “in a
manner that complies with applicable . . . codes[] or law”).
Professional land surveyors prepare plats and similar documents
affecting property rights. See BO&P 15-101(k). Licensed athlete
agents negotiate contracts on their clients’ behalf, and presumably
also explain contract terms to their clients. See Md. Code Ann.,
Bus. Reg. § 4-401(b), (c). And registered tax preparers give tax
advice and prepare tax returns. See BO&P § 21-101(f). Holding
that the application of legal principles to a client’s situation is
always practicing law would impair or destroy these licensed
professionals’ ability to function. See Real Estate Bar, 459 Mass.
at 518 (noting this issue); cf. Kennedy, 316 Md. at 662 (rejecting a
definition of law practice that “would be impossible to apply and
enforce in the real world”).
Finally, in deciding whether a given activity violates the
prohibition on unauthorized practice, the court may also consider
the purpose of the unauthorized practice prohibition, which is to
protect the public and the legal system from unqualified and/or
unethical practitioners. See R.G.S., 312 Md. at 638. In some
situations, there will be “little consumer benefit” to requiring an
attorney to perform a particular task, and “little threat that the
absence of an attorney will result in the consumer harm that the
prohibition against unauthorized practice is designed to prevent.”
90 Opinions of the Attorney General at 106.
50 [109 Op. Att’y
With those principles in mind, we will consider whether any
of the categories of BOIR-related activity listed above qualifies as
the practice of law.12
B. BOIR Assistance and the Practice of Law
1. Providing General Information About the BOIR
Requirement
We first consider whether it would be practice of law to
inform clients generally that the BOIR requirement exists and must
be complied with; to answer general questions about the BOIR
requirement, without particularizing an answer to the client’s
individual circumstances; and/or to direct the client to FinCEN’s
published guidance.
In our opinion, none of these activities would constitute the
practice of law. Our Office has consistently opined that providing
general information about the law, without expressing a view about
the client’s particular circumstances, is not law practice. For
example, in 79 Opinions of the Attorney General 174, we
concluded that a nonlawyer social worker could inform a birth
parent of the existence of certain statutory rights, including the
right to revoke consent to an adoption, id. at 175-77. Similarly, we
have opined that it is not unauthorized practice of law for a “lay
advocate” to give domestic violence survivors “unadorned . . .
information about what rights and remedies exist.” 80 Opinions of
the Attorney General at 142; see also, e.g., Letter from Robert N.
McDonald, Chief Counsel for Opinions & Advice, to Robert J.
Rhudy, Esq., Maryland Legal Servs. Corp., at 9 (Oct. 3, 2001)
(“Rhudy Letter”) (“[A] legal services hotline that simply dispenses
general information about an area of the law, as opposed to
12
If FinCEN were to promulgate a regulation expressly authorizing
CPAs to perform certain activities related to BOIR preparation, our
analysis could change. Such a federal regulation might preempt the
State’s unauthorized practice of law rule as applied to BOIR preparation.
See Sperry v. Florida ex rel. Florida Bar, 373 U.S. 379, 385 (1963)
(holding that regulations authorizing nonlawyers to practice before the
U.S. Patent Office preempted state unauthorized practice of law rules).
But while FinCEN has recognized that some reporting companies may
turn to CPAs for BOIR preparation, see, e.g., BOIR Final Rule at 59,571,
so far we see no evidence of an intent to preempt State unauthorized
practice of law rules, see Wells v. Chevy Chase Bank, F.S.B., 377 Md.
197, 211 (2003) (noting that analysis of preemptive effect of federal
regulation turns on federal agency’s intent).
Gen. 32] 51
particularized legal advice, would not be involved in the practice
of law.”).
This view rests on “common practice and common sense,”
because “[c]ommerce and government would grind to a halt if
every piece of information about a statutory right or obligation
could be communicated only by a lawyer.” 79 Opinions of the
Attorney General at 176. But our view that providing general
information about the law is not law practice also aligns with the
principle that an activity is not the practice of law if it does not
require a lawyer’s skill and judgment. Merely pointing out the
existence of certain legal rights and remedies requires some
knowledge of the law but does not necessarily require a lawyer’s
specialized abilities.
It thus would not be the practice of law for a CPA to offer
clients general information about the BOIR requirement or to
answer general questions about it. See Rhudy Letter at 9. Along
similar lines, we think a CPA could direct a client to BOIR
guidance promulgated by FinCEN, such as the FinCEN
Compliance Guide and FAQs on the FinCEN website, without
straying beyond the boundary of giving “general information”
about the law. CPAs can thus provide this kind of basic
information about the BOIR requirement to their clients.
2. “Mechanically” Filling Out and Filing the BOIR Form
If a client were to determine for itself that it is a reporting
company and provide its CPA with a list of beneficial owners, it
would not be “practice of law” for the CPA to gather the necessary
information about each beneficial owner (address, birthdate, etc.),
enter it on the BOIR form, and file the form with FinCEN. The
“mere mechanical filling out of forms” does not require a lawyer’s
skills and so is not the practice of law. Lukas, 35 Md. App at 448.
Following Lukas, we have concluded that it would not be practice
of law for a loan officer to insert factual information, such as the
name of the borrower and address of the property, in a standardized
mortgage form. 90 Opinions of the Attorney General at 105.
Similarly, the BOIR form is a standardized, government-provided
form, and merely entering factual information on the form and
filing it with FinCEN would not be law practice.
52 [109 Op. Att’y
3. Determining Whether the Client Is a “Reporting
Company” or Identifying a Client’s Beneficial Owners
A client might ask their CPA for help in determining whether
it is a “reporting company” that is required to file a BOIR, or with
identifying its “beneficial owners” as defined in the Act. These
determinations are closer to the line of “practice of law” than the
other activities we have discussed so far. They require applying
the law—the Transparency Act and implementing regulations—to
a particular client’s circumstances. But this is only the beginning
of the analysis. See supra Part II.A. The ultimate question is
whether helping a client determine its “reporting company” status
or identify beneficial owners comes within the “fair intendment” of
the term “practice of law,” and whether it calls for a lawyer’s
professional training, skills, and judgment. See, e.g., Hallmon, 343
Md. at 397.
An important consideration in this analysis is that FinCEN has
published detailed instructions for BOIR reporting. See generally
Compliance Guide, supra. The instructions provide a series of yes-
or-no questions (some in flowchart form) and arithmetic questions.
Answering the questions posed by these instructions will, in theory,
provide all the information one needs to comply with the BOIR
requirement, including the determination of whether an entity is a
“reporting company” and who its beneficial owners are.
Compliance Guide at 2-31.13 Once an entity has gone through the
instructions, assuming it is a reporting company, only the
ministerial task of listing beneficial owners on the BOIR form and
filing it will remain.
FinCEN designed the BOIR instructions for lay users. See id.
at v. In fact, FinCEN expects that “many, if not most” entities,
aided by the instructions, should be able to comply with the BOIR
requirement without professional assistance from either an attorney
or a CPA. FinCEN, Beneficial Ownership Information:
Frequently Asked Questions § B.7 (Apr. 18, 2024),
https://www.fincen.gov/boi-faqs.
13
Two other aspects of BOIR compliance covered by the instructions
are the determination whether a person who would otherwise qualify as
a “beneficial owner” is exempt from that status, Compliance Guide at
29-31; see supra note 7, and the identification of “applicants”—the
individuals responsible for filing the paperwork to create a new entity,
Compliance Guide at 32-36; see supra note 8. Although we do not
separately discuss these issues, the framework we set forth below applies
to them as well.
Gen. 32] 53
The existence and accessibility of these government-provided
instructions is a relevant consideration in the practice-of-law
analysis. “Filling out standard government forms for others is not
necessarily the practice of law.” Real Estate Bar, 459 Mass. at 525.
This is because such forms are often designed to be filled out by
laypersons, without the need for any independent legal knowledge.
See Lowell Bar Ass’n v. Loeb, 315 Mass. 176, 185 (1943) (noting
that in many cases, an income tax form “can readily be filled out
by any intelligent taxpayer . . . who has the patience to study the
instructions”); Countrywide Home Loans, Inc. v. Kentucky Bar
Ass’n, 113 S.W.3d 105, 122 (Ky. 2003) (recognizing that, at real
estate closings, a lawyer is not needed for questions that can be
answered “by reading the face of the document or by offering a
blackletter description”).
Completion of a government form in compliance with
instructions designed for laypersons thus does not necessarily
require a lawyer’s skills. This is especially true for a reporting or
disclosure form. With this kind of form, neither discretionary
judgment as to means or ends nor unguided issue-spotting is
involved; the only objective is correct compliance with one specific
mandate. See Hargis v. JLB Corp., 357 S.W.3d 574, 585 (Mo.
2011) (holding that preparation of loan applications and financial
disclosures was not practice of law because “[t]he forms state what
information is required to be filled in or provided” and “accuracy,
rather than discretion—legal or otherwise—is what is required”).
And if the form’s instructions are designed to be understood by
laypersons, then neither independent knowledge of substantive law
nor legal interpretation skills are required to correctly complete the
form.
Consistent with that view, we have recognized that walking a
layperson through the instructions for a legal form is not
necessarily the practice of law. For example, our 1995 opinion
concluded that a lay advocate could help a domestic violence
survivor “fill out a form pleading herself by defining terms in the
instructions . . . or by pointing out where on the form particular
information is to be set out.” 80 Opinions of the Attorney General
at 143. We have also concluded that filling in factual information
in a standardized mortgage form is not the practice of law. 90
Opinions of the Attorney General at 106-07.
In other contexts, however, assisting with a form might well
be the practice of law. For example, where a form will be filed in
an adversarial proceeding, creates or alters legal rights (like a
contract or deed), or requires discretionary choices among
54 [109 Op. Att’y
alternatives (such that advice is needed on the possible legal effects
of each choice), assistance with the form that goes beyond merely
transcribing factual information is more likely to be considered the
practice of law. See, e.g., 80 Opinions of the Attorney General at
144; In re Peterson, No. 19-24045, 2022 WL 1800949, at *46-48
(Bankr. D. Md. June 1, 2022) (holding that a nonprofit engaged in
unauthorized practice of law by offering software to guide
bankruptcy petitioners’ choice of exemptions for property).
Similarly, helping a client identify which forms are needed to
achieve their objectives in the first place may, in some cases,
qualify as law practice. See Attorney Grievance Comm’n v.
Brisbon, 422 Md. 625, 638-39 (2011) (involving selection of
immigration forms). But none of those circumstances exist here.
When considering unauthorized practice questions, it is also
important to keep in mind the purpose of the unauthorized practice
prohibition, which seeks to prevent incompetent and/or unethical
“representation” by nonlawyers. See, e.g., R.G.S., 312 Md. at 638;
90 Opinions of the Attorney General at 106. In the context of
advocacy before tribunals or preparation of legal instruments, for
example, an error by an incompetent practitioner can cause
irreparable harm, such as a missed statute of limitations, a
judgment against the client that a competent lawyer could have
avoided, a client bound to unfavorable contract terms, or a will that
doesn’t effectuate the client’s wishes. See, e.g., Md. Rule 19-301.3
cmt. 3. But with a government form that merely implements a
statutory disclosure requirement, the probability of a mistake
irreparably harming the client’s interests, through the permanent
loss of a valuable legal right or the taking on of an unwanted legal
duty, is smaller.
A BOIR does come with legal consequences for
misstatements or material omissions—potentially severe
consequences—but the same is true for almost every document
filed with the government. Moreover, an error on a BOIR will
cause no legal harm unless the error is willful. See 31 U.S.C.
§ 5336(h)(1). And an error or omission stemming solely from a
good-faith misinterpretation of the instructions is unlikely to meet
that threshold. Under the Transparency Act, a “willful” violation
must be both voluntary and intentional. 31 U.S.C. § 5336(h)(6);
see also Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,
559 U.S. 573, 584-85 (2010) (noting that, in general, a statutory
violation based on a mistake of law is not considered “willful”). So
assuming the CPA acts in good faith, the risk that any errors they
make in BOIR preparation will harm the client is relatively low, at
least compared to errors in traditional law-practice activities.
Gen. 32] 55
Furthermore, CPAs, like lawyers, are subject to high ethical
standards. The CPA code of professional conduct, adopted by the
Board of Public Accountancy, covers subjects such as
independence, truthfulness, competence, and confidentiality.
COMAR 09.24.01.06; cf. Sperry v. Florida ex rel. Florida Bar, 373
U.S. 379, 402 (1963) (noting that state’s interest in protecting the
public from unqualified practitioners was lessened in the case of
patent agents who must meet Patent Office standards). A CPA
violating this code of conduct may face reprimand, monetary
penalties, license suspension, or license revocation. BO&P
§ 2-315.
Where, as here, the risk of errors causing irreparable harm to
the client is small, and the service is provided by a practitioner
subject to ethical constraints, there is “little threat that the absence
of an attorney will result in the consumer harm that the prohibition
against unauthorized practice is designed to prevent.” 90 Opinions
of the Attorney General at 106. These considerations standing
alone would not necessarily be enough to take an activity outside
the bounds of law practice. A low-risk activity may nonetheless
qualify as practice of law. But the low risk of client harm is a
relevant factor in determining whether a trained and qualified
lawyer’s skills are necessary for a given task.
With these principles as our starting point, we will make our
best effort to offer guidance about which activities in BOIR
assistance (beyond providing general information and mechanical
form-filling) would be unauthorized practice of law. However,
because the array of questions and fact situations that might
potentially exist in the BOIR context is so large, and because of the
courts’ case-by-case approach in this area, we are unable to provide
a bright-line set of rules that will address every potential
circumstance in advance. Identifying unauthorized practice of law
in this context is less a question of kind and more a question of
degree: the degree to which the situation calls for a lawyer’s
knowledge, training, skills, and judgment. With that said, the
following general principles may assist in evaluating particular
situations.
i. Walking the Client Through the Instructions
First, we think a CPA may walk a client through the
instructions as laid out in FinCEN’s Compliance Guide by
directing the client’s attention to each question in turn and
recording the client’s answers. This includes following the yes-or-
no branches on one of the instructions’ flowcharts, e.g.,
56 [109 Op. Att’y
Compliance Guide at 2, and performing simple calculations to
determine ownership shares, id. at 23, as appropriate. If the client
is able to answer all of these questions, then determination of
“reporting company” status and identification of beneficial owners
based on their answers will be a merely “mechanical” function. See
Lukas, 35 Md. App at 448. Given that the instructions are designed
for laypeople, merely walking a client through the instructions in
this way does not seem to require a lawyer’s skills. See 80
Opinions of the Attorney General at 143.
Some of the individual questions within the instructions might
call for some form of legal analysis, such as whether a particular
individual has authority to appoint or remove a majority of the
entity’s board of directors. See infra Part II.B.3.iii. But we suspect
that, in many cases, the client will nonetheless be able to answer a
lot of these questions based on their own knowledge. For example,
an existing entity is likely to already know whether it is a federally
regulated bank, and an entity’s management is likely to know who,
if anyone, controls the seats on its board of directors. A CPA who
merely asks the client these questions and notes the answers would
clearly not be practicing law. However, to ensure that the client
does not explicitly or implicitly rely on the CPA for legal advice
during this process, we recommend that the CPA warn the client
that the CPA cannot provide legal advice and that the client should
consult an attorney if uncertain about any legal question. See 90
Opinions of the Attorney General at 102 (favorably noting loan
officers’ similar practice when completing mortgage forms).
ii. Defining Terms
Nor do we think a CPA is necessarily limited to reciting the
instructions’ questions and recording the client’s answers. For
example, based on the logic of our 1995 opinion involving
domestic violence survivors’ advocates, we think it would not be
the practice of law for a CPA to define at least some terms in order
to clarify the questions for a client. See 80 Opinions of the Attorney
General at 143. At a minimum, this would include terms like
“corporation” or “stock” that would be familiar to a layperson with
only “the most elementary knowledge of law.” Id. at 141 (quoting
Lukas, 35 Md. App. at 448). And although the question is closer,
we think a CPA could also define terms, like “equity” or “trust,”
that would be familiar to CPAs through their own training and
expertise, even if not to the general public, Compliance Guide at
21-22. Terms that are within the expertise of a reasonably
competent CPA do not necessarily require legal knowledge or
training to define. Moreover, there is no consumer-protection
Gen. 32] 57
reason to prohibit a CPA from defining terms that are commonly
known by CPAs. See 90 Opinions of the Attorney General at 106.
iii. Answering Questions from the Form for the
Client
More difficult issues could arise if a client were to ask their
CPA to go beyond walking them through the instructions and
defining terms. For example, a client might seek advice from their
CPA on how to answer a question from the instructions when the
client is uncertain how the instructions apply to the client’s
situation; might ask a CPA to answer one or more of those
questions for the client; or might want to delegate the BOIR
preparation process in its entirety to the CPA.
As always, whether a CPA can help the client answer a
question in the instructions, or actually answer some or all of those
questions on the client’s behalf, depends on whether answering the
question(s) would require legal knowledge and skill. “Legal
knowledge and skill” includes awareness of substantive rules of
law; legal research skills; facility with general legal principles, like
the rules of statutory interpretation or the principles of analyzing,
weighing, and analogizing from precedent; and the ability to “issue
spot,” that is, to identify legal problems or legal options in a given
fact situation. See supra Part II.A; Md. Rule 19-301.1; Hallmon,
343 Md. at 397 (explaining that the practice of law involves
application of “legal principles and precedent”). There are no
bright lines here, but a spectrum: The more this knowledge and
these skills are involved in answering a question, the more likely it
is that answering the question would be practicing law.
Under this “legal knowledge and skill” test, a CPA who goes
beyond walking clients through the instructions, and instead
answers one or more of the questions themselves, will not
automatically be practicing law. See 90 Opinions of the Attorney
General at 102, 106 (concluding that a bank employee filling out a
standardized mortgage form with factual information, such as the
address of a property, involves little or no legal knowledge or skill).
For instance, we doubt any court would hold that it takes legal
knowledge or skill to identify the CEO of a company. See
Compliance Guide at 20.
Nor does the “legal knowledge and skill” test necessarily
preclude factual research and analysis. A CPA likely may still
answer questions that require gathering facts from the client’s
records or the CPA’s preexisting knowledge. To take one likely
58 [109 Op. Att’y
scenario, it would at least ordinarily not seem to require substantive
knowledge of law, or any of the legal skills identified above, to
compile a list of holders of one of the types of ownership interest
identified in the instructions, such as common stock. See id. at 22-
23. And while it may require legal knowledge and skill to
determine in the first instance whether an entity is required to
register under a particular statutory regime, see, e.g., id. at 5, it
might not require such knowledge to determine whether an entity
is in fact already registered under a particular regime—for
example, whether it has registered a security with the SEC.
In other cases, however, answering the client’s questions
might well require legal knowledge and skill and would be
tantamount to giving legal advice about how to apply the law to the
client’s particular facts. In that event, answering the client’s
questions would constitute the practice of law. Although (as
discussed above) the application of law to specific facts is not
always the practice of law, see supra Part II.A., it can certainly rise
to the level of “legal advice,” Kennedy, 316 Md. at 663, 666, that
needs to be performed by a lawyer when, under the circumstances,
a lawyer’s knowledge and skills are required, see, e.g., Shaw, 354
Md. at 649.
For example, questions such as whether an individual controls
a majority of board seats, Compliance Guide at 20, or whether a
type of interest in the company that is not mentioned in the
instructions qualifies as an ownership interest, see id. at 22, might
in some cases require legal skills to answer, depending on the
extent to which analysis and interpretation of legal documents is
required. As another example, the question of whether an entity is
exempt from reporting on the ground that it “exercises
governmental authority,” id. at 5, seems to be, at least in Maryland,
a primarily legal question involving analysis of the entity’s legal
powers and functions in light of State law precedent on similar
questions, see, e.g., Napata v. University of Md. Med. Sys. Corp.,
417 Md. 724, 729, 737 (2011). Again, we do not suggest that the
client cannot answer these questions themselves. We suggest only
that it would be difficult for a CPA to answer such a question for a
client, or to guide a client in answering, without practicing law.
A client also might ask a CPA to answer general questions
that go beyond individual items on the form or in the instructions.
For example, a client might ask whether there are any beneficial
owners who have not yet been identified. This kind of question
might be challenging for a CPA to answer without engaging in the
unauthorized practice of law. It would presumably require the CPA
Gen. 32] 59
to consider in the abstract whether some possible but as-yet-
unidentified individual(s) might be covered either by one of the
specific “beneficial owner” categories or by the “catch-all”
questions in the instructions—whether there are “any other
individuals who have substantial control over your company,”
Compliance Guide at 20, or “any other instrument, contract,
arrangement, understanding, relationship, or mechanism to
establish ownership,” id. at 22. This is the sort of unguided issue
spotting in a legal context that lawyers normally perform.14
Finally, we doubt that a client will be able to delegate the
BOIR preparation process to the CPA in its entirety, that is, to ask
that the CPA complete every aspect of the BOIR without client
assistance based entirely on the CPA’s pre-existing knowledge and
factual records requested from the client. There are at least some
questions in the BOIR instructions, including the catch-all
questions, that would be difficult for a CPA to answer without the
application of legal knowledge and skill. As we have explained,
the CPA can walk the client through such questions and the client
can answer them, but the CPA who answers them alone risks
practicing law.
Again, we cannot answer every potential question in advance.
A CPA who wishes to provide BOIR assistance will need to use
their best judgment, in light of the principles and examples above,
to decide whether answering a particular question in the BOIR
context requires consultation with a lawyer.15
14
The presence of these “catch-all” questions does not prevent the
CPA from walking the client through the instructions, or from defining
specific words in the catch-all questions for the client, as we have
discussed. However, we doubt that a CPA will be able to answer these
questions for the client. Instead, the client will need to answer them
based on their own knowledge of the company and individuals connected
with the company.
15
The Act requires an entity to file an updated BOIR whenever the
company’s previously reported information changes. See 31 U.S.C.
§ 5336(b)(1)(D); 31 C.F.R. § 1010.380(a)(2). MACPA asked about the
possibility that a CPA might be asked to assist “in developing internal
procedures to monitor ongoing compliance, making sure that any
changes in beneficial ownership are promptly reflected in the reports.”
MACPA Comments at 2. Without knowing what such a compliance
program would look like, it is difficult to opine in the abstract on whether
designing such a program would involve practicing law. However, as
we have just noted, it would be difficult for a CPA to provide
comprehensive assurance that an entity’s BOIR is complete and requires
no updates without engaging in the practice of law.
60 [109 Op. Att’y
III
Conclusion
In our opinion, the Maryland courts would most likely hold
that a CPA may, without violating the prohibition on unauthorized
practice of law, provide clients general information about the
Transparency Act and the BOIR requirement without tailoring the
information to any client’s individual situation, or fill out and file
a BOIR form using a list of beneficial owners submitted by the
client. Though the question is closer, a CPA likely also may help
a client to determine whether it is a “reporting company,” or to
identify its “beneficial owners” within the meaning of the
Transparency Act, by walking the client through FinCEN’s
instructions, by defining terms that are familiar to nonlawyers
and/or CPAs, or by answering questions for the client where the
question and answer do not call for legal knowledge or skills.
However, a CPA generally should not answer a BOIR-related
question for a client where there is uncertainty as to the answer and
resolving that uncertainty would require legal knowledge, skill, and
judgment.
Anthony G. Brown
Attorney General of Maryland
Thomas S. Chapman
Deputy Chief Counsel, Opinions
and Advice
Patrick B. Hughes
Chief Counsel, Opinions and Advice