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#2230813 - 02/12/20 04:17 PM CTR Ruling for Sole Proprietorships and Legal Enti
MBTCompliance Offline
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Can you help me decipher this CTR ruling which was issued yesterday?

https://www.fincen.gov/index.php/re...gs/fincen-ctr-form-112-reporting-certain


Regarding sole proprietorships, if we have…

•John Doe DBA Doe Farms
•John Doe DBA Doe Rentals

…then would we have two Part I’s for each DBA with John’s personal info, the DBA name, and the account number/amount deposited to each?


Or if…

•Both of John’s DBA operate from the same address

…then would we still have two Part I’s since there are two DBA, or, since the address (location) is the same, would we only have one Part I?


Regarding legal entities, if we have…

•ABC Inc DBA ABC Hardware
•ABC Inc DBA ABC Auto Parts
•Both DBA operate at a different address

…then would we have three Part I’s; one Part I for the home office with ABC’s legal name only, no DBA name listed, account number/amount deposited aggregated from both DBA, and two more Part I’s with ABC’s legal name and each separate DBA name listed with account number/amount deposited to each?


But if…

•Both of ABC’s DBA operate from the same address which is same as the entity address

…then would we have only one Part I, or would we have two Part I since there are two DBA?

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#2230838 - 02/12/20 05:49 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
mleu Offline
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I'd be interested to hear others' take on this, too. We have a client (since exempted, thank goodness) who has DBAs for multiple venues in the area but all cash flows through a single LLC account. It sounds like we'd have to decipher how much cash was for each place, which would be a nightmare.

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#2230843 - 02/12/20 06:00 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
Adam Witmer Offline
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First, this guidance is a mess and strangely similar to the changes they wanted to make in October regarding the use of the multiple transaction box. Like that guidance, I wonder if they will come out with a v2 to revert/correct the confusion. We will see. Here is my initial take on this:
Originally Posted by MBTCompliance
Regarding sole proprietorships, if we have…
•John Doe DBA Doe Farms
•John Doe DBA Doe Rentals
…then would we have two Part I’s for each DBA with John’s personal info, the DBA name, and the account number/amount deposited to each?

Yes. " If the individual owner operates under multiple DBAs, then a separate Part I section should be completed for each different DBA involved in the transactions.”
Originally Posted by MBTCompliance
Or if…
•Both of John’s DBA operate from the same address
…then would we still have two Part I’s since there are two DBA, or, since the address (location) is the same, would we only have one Part I?

I believe there should be two Part I’s based on ” If the individual owner operates under multiple DBAs, then a separate Part I section should be completed for each different DBA involved in the transactions.” and “If there are multiple alternate names involved in the transactions, additional Part I’s are required to record the additional alternate names.”
Originally Posted by MBTCompliance
Regarding legal entities, if we have…
•ABC Inc DBA ABC Hardware
•ABC Inc DBA ABC Auto Parts
•Both DBA operate at a different address
…then would we have three Part I’s; one Part I for the home office with ABC’s legal name only, no DBA name listed, account number/amount deposited aggregated from both DBA, and two more Part I’s with ABC’s legal name and each separate DBA name listed with account number/amount deposited to each?

Yes, based on "When multiple entity locations are involved in an aggregated CTR, a separate Part I section should be prepared for each location involved. Each additional Part I section should include the entity’s legal name in Item 4 and alternate name, if any, in Item 8. Each additional Part I section will include the location’s address along with all other location or entity data applicable to that location. The amount and account number(s) entered in Item 21 “Cash in amount…” or Item 22 “Cash out amount…” will be the amount and account number(s) associated with the specific location. The initial Part I section on the entity home office/headquarters will show the total amount and all account numbers involved in Item 21 or 22."
Originally Posted by MBTCompliance
But if…

•Both of ABC’s DBA operate from the same address which is same as the entity address

…then would we have only one Part I, or would we have two Part I since there are two DBA?

It seems like you would only have a single Part I based on this ” When the entity home office address is the same as the transaction location, only a home office Part I section should be prepared.”
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2230854 - 02/12/20 06:29 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
ahou Offline
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ahou
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That's how I read it. I agree with Adam
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#2230865 - 02/12/20 06:50 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
BrianC Online
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John Burnett was already planning a session on the October 2019 CTR changes for Top Gun. He'll be adding a discussion on this new guidance to that session.
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#2230872 - 02/12/20 07:00 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
John Burnett Offline
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Our friends at FinCEN seem to think that putting their instructions in a narrative paragraph makes things clearer. If they thought like bankers, they would use a bullet or numbered list, breaking the instructions down into smaller bites.

PERSONAL COMMENT (feel free to borrow it without attribution): When FinCEN makes a change and says it's being done "to both enhance regulatory efficiency and provide complete and accurate CTR data to law enforcement," we should read it as "to make filing CTRs more cumbersome and time-consuming for reporting financial institutions."
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#2230876 - 02/12/20 07:09 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
John Burnett Offline
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For entities using DBA names and multiple locations, it could be argued there would need to be a Part I included for each different combination of DBA name and location.

What happens when an entity uses more than one DBA but operates them out of a single account?
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#2230886 - 02/12/20 07:30 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti Adam Witmer
John Burnett Offline
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Originally Posted by Adam Witmer
First, this guidance is a mess and strangely similar to the changes they wanted to make in October regarding the use of the multiple transaction box. Like that guidance, I wonder if they will come out with a v2 to revert/correct the confusion. We will see. Here is my initial take on this:
Originally Posted by MBTCompliance
Regarding sole proprietorships, if we have…
•John Doe DBA Doe Farms
•John Doe DBA Doe Rentals
…then would we have two Part I’s for each DBA with John’s personal info, the DBA name, and the account number/amount deposited to each?

Yes. " If the individual owner operates under multiple DBAs, then a separate Part I section should be completed for each different DBA involved in the transactions.”
Originally Posted by MBTCompliance
Or if…
•Both of John’s DBA operate from the same address
…then would we still have two Part I’s since there are two DBA, or, since the address (location) is the same, would we only have one Part I?

I believe there should be two Part I’s based on ” If the individual owner operates under multiple DBAs, then a separate Part I section should be completed for each different DBA involved in the transactions.” and “If there are multiple alternate names involved in the transactions, additional Part I’s are required to record the additional alternate names.”
Originally Posted by MBTCompliance
Regarding legal entities, if we have…
•ABC Inc DBA ABC Hardware
•ABC Inc DBA ABC Auto Parts
•Both DBA operate at a different address
…then would we have three Part I’s; one Part I for the home office with ABC’s legal name only, no DBA name listed, account number/amount deposited aggregated from both DBA, and two more Part I’s with ABC’s legal name and each separate DBA name listed with account number/amount deposited to each?

Yes, based on "When multiple entity locations are involved in an aggregated CTR, a separate Part I section should be prepared for each location involved. Each additional Part I section should include the entity’s legal name in Item 4 and alternate name, if any, in Item 8. Each additional Part I section will include the location’s address along with all other location or entity data applicable to that location. The amount and account number(s) entered in Item 21 “Cash in amount…” or Item 22 “Cash out amount…” will be the amount and account number(s) associated with the specific location. The initial Part I section on the entity home office/headquarters will show the total amount and all account numbers involved in Item 21 or 22."
Originally Posted by MBTCompliance
But if…

•Both of ABC’s DBA operate from the same address which is same as the entity address

…then would we have only one Part I, or would we have two Part I since there are two DBA?

It seems like you would only have a single Part I based on this ” When the entity home office address is the same as the transaction location, only a home office Part I section should be prepared.”

...And, because of the prohibition on putting more than one DBA name in item 8, you'd either omit mentioning the DBAs completely, or only include one of them.
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#2230890 - 02/12/20 07:39 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti John Burnett
MBTCompliance Offline
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That very last thing you just added John was confusing to me. The problem lies in the fact they're stressing "location" instead of number of separate DBAs.

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#2231966 - 02/27/20 09:13 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
BSA Aficionada Offline
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Posts: 89
A sole proprietor maintains both personal and business accounts, as follows:

John Smith (Sole Owner) - SSN 123-45-6789
123 Main Street
Anywhere, USA

John Smith DBA John Smith's Brokerage Agency - SSN of Sole Proprietor
123 Main Street
Anywhere, USA

On a single business day, John deposits $8,000 to his personal account and $8,000 to his business account. In compliance with the new ruling, would this require a single Part 1 with a cash-in amount of $16,000? If yes, would all information other than name, gender, and DOB, reflect that of the DBA?

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#2232382 - 03/04/20 11:24 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti BSA Aficionada
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Posts: 89
Can anyone share any insight on the scenario provided?

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#2232439 - 03/05/20 05:40 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
ColoradoAML Offline
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I agree with you that one Part 1 would be required. The guidance reiterates that a sole proprietorship is not a separate legal person from its individual owner, and it only states that multiple Part 1s are required if they are operating under multiple DBAs.

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#2232481 - 03/05/20 09:05 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
Luv2run Offline
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When completing Part 1 for the Sole Proprietor DBA, would you put the sole proprietor SSN# on the form?
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#2232513 - 03/06/20 02:27 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
John Burnett Offline
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Yes, definitely. Use the SSN associated with the sole proprietorship.

What is not clear in the Ruling is whether, in the scenario depicted by BSA Aficionada, you would complete the rest of Part I with the owner's information (address, phone #, email address) or the business.

That's what happens when FinCEN fails to ask bankers for feedback before rolling out these CTR instruction changes. They fail to cover common scenarios.
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#2237269 - 05/27/20 06:16 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
abullard Offline
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DFW, Texas
I need to restart this conversation PLEASE.

First question, actually a clarification please. On John's last comment here he says to use the SSN associated with the sole prop; however the FinCEN notice states: If the individual owner is operating the business under a different name (a “doing business as” or “DBA” name), then such name should appear in Item 8 “Alternate name,” and the rest of Part I (other than Items 4-6, 7 and 17 identifying the individual owner) be completed with reference to the DBA name. So that would mean Item 15 TIN would be filled out with an EIN if the DBA has one, right?

Here is my big question though that I don’t see addressed anywhere. Which Item 2 do you choose? Joe Customer deposits $6,000 cash to ABC Corp and $6,000 cash to Joe Customer DBA A Hotel. I see 3 Part I’s here. 1st Part I is for ABC Corp marked 2c Person on whose behalf transaction is conducted (easy enough); 2nd Part I is for Joe Customer DBA A Hotel marked either 2c Person on whose behalf transaction is conducted -OR- 2a Person conducting transaction of own behalf (this I cannot figure out and I used an EIN because the DBA had one); 3rd Part I is for Joe Customer as Item 2b Person conducting transaction for another (for both the Corp and the DBA). Thoughts?

Thanks!

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#2237274 - 05/27/20 06:47 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti abullard
Adam Witmer Offline
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abullard - Welcome to the BankersOnline forums! Before you dig into this, I just wanted to be sure you were aware that FinCEN suspended this ruling: https://www.fincen.gov/news/news-re...k-provides-further-information-financial

"FinCEN hereby suspends implementation of the February 6, 2020 ruling (FIN-2020-R001) on CTR filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name (the “2020 Ruling”) until further notice. FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods. Until such issuance, financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice. Those financial institutions that have already made the necessary changes to comply with the 2020 Ruling need not revert to prior practice, and may report CTRs in accordance with the now-suspended ruling."

Originally Posted by abullard
First question, actually a clarification please. On John's last comment here he says to use the SSN associated with the sole prop; however the FinCEN notice states: If the individual owner is operating the business under a different name (a “doing business as” or “DBA” name), then such name should appear in Item 8 “Alternate name,” and the rest of Part I (other than Items 4-6, 7 and 17 identifying the individual owner) be completed with reference to the DBA name. So that would mean Item 15 TIN would be filled out with an EIN if the DBA has one, right?

Yes, the guidance [indirectly] says to list the information for the DBA.
"If the individual owner is operating the business under a different name (a “doing business as” or “DBA” name), then such name should appear in Item 8 “Alternate name,” and the rest of Part I (other than Items 4-6, 7, and 17 identifying the individual owner) be completed with reference to the DBA name.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2237320 - 05/28/20 05:21 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
abullard Offline
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Thank you Adam, its good to get into practice with the new rule for when it does come out. ;-) What about the second half of my post, any thoughts on that?

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#2237330 - 05/28/20 07:50 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
John Burnett Offline
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The deposit to the DBA business is reported on Part I as Joe on own behalf (2a), but include the DBA line in item 8. Joe is not legally separate from that business.

The Joe on behalf of (2b) Part I only covers the deposit to the corporate account.
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#2257207 - 07/26/21 06:29 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
GTS333 Offline
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Sorry to revive this old thread, but I have a follow-up on abullard's question above. Abullard asked:

"On John's last comment here he says to use the SSN associated with the sole prop; however the FinCEN notice states: If the individual owner is operating the business under a different name (a “doing business as” or “DBA” name), then such name should appear in Item 8 “Alternate name,” and the rest of Part I (other than Items 4-6, 7 and 17 identifying the individual owner) be completed with reference to the DBA name. So that would mean Item 15 TIN would be filled out with an EIN if the DBA has one, right?"

I know that FinCEN has suspended FIN No. 2020-R001; however I see Q&A #26 on the FinCEN website which talks about how to complete a CTR for a sole proprietorship. That Q&A points to General Instructions item 17 (and 18) which states:

17. Sole Proprietorship. A sole proprietorship is a business in which one person, operating in his or her own personal capacity, owns all of the business’s assets and is responsible for all of the business’s liabilities. Consistent with the definition of “person” in the Bank Secrecy Act’s implementing regulations, a sole proprietorship is not a separate legal person from its individual owner. Thus, when a CTR FinCEN Form 112 is prepared on transactions involving a sole proprietorship, a financial institution should complete a single Part I “Person Involved in Transaction” section with the individual owner’s name in Items 4 through 6, gender in Item 7, and date of birth in Item 17.If the individual owner is doing business in his or her own name, then the rest of Part I should be completed reflecting the individual owner’s information. If the individual owner is operating the business under a different name (a “doing business as” or “DBA” name), then such name should appear in Item 8 “Alternate name,” and the rest of Part I (other than Items 4-6, 7, and 17 identifying the individual owner) be completed with reference to the DBA name. If the individual owner operates under multiple DBAs, then a separate Part I section should be completed for each different DBA involved in the transactions. The amount and account number(s) entered in Item21 “Cash in amount...” or Item 22 “Cash out amount...” will be the amount and account number(s) associated with the specific location corresponding to the reported transaction.

The language in item 17 that says “and the rest of Part I (other than items 4-6, 7 and 17 identifying the individual owner) be completed with reference to the DBA name”. This suggests to me that we would need to report the EIN for the sole proprietorship (if they have one), rather than the SSN of the individual even though 2020-R001 is suspended. Am I reading that correctly, or should we still be reporting the SSN of the sole proprietorship (if it also has an EIN) until 2020-R001 is reintroduced?

Thanks
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#2257210 - 07/26/21 07:01 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
John Burnett Offline
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Yes, it is interesting the FinCEN in one set of instructions references another that happens to be suspended. By way of background, though, a sole prop may, in fact, have an EIN, but only for the purposes of depositing withheld taxes if there are employees and paying any federal excise the business has to pay. It's not supposed to be used for opening deposit accounts.

Apparently, FinCEN is not refusing CTRs employing the instructions in items 17 and 18 in the XML CTR instructions, but isn't requiring that 17 and 18 be followed, either.

I don't know how many sole proprietors there are who have more than one or two businesses with separate DBA names.

And, for whatever it's worth, I think that suspended instruction 18 needs work.
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#2257212 - 07/26/21 07:07 PM Re: CTR Ruling for Sole Proprietorships and Legal Enti MBTCompliance
GTS333 Offline
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Thank you for the quick reply, John - very much appreciated.
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