NFIB calls on Congress to remove a new small business mandate buried in the national defense bill
In Congress this week and next, a “conference committee” of U.S. Senators and Representatives will meet and agree on a national defense spending bill (National Defense Authorization Act). But buried in the House defense bill is a new small business mandate that impacts businesses with 20 or fewer employees, known as the Corporate Transparency Act. It’s an issue NFIB and our members have opposed since it surfaced in 2019. In a recent NFIB member ballot, 80% of small business owners opposed this type of paperwork requirement.
Jim Henderson, a small business owner in Missouri, says, “The Corporate Transparency Act that they’re trying to push through on a defense bill is not necessary. It hurts small businesses. And I would just encourage other small business owners to contact their elected representatives and tell them: ‘We don’t need more burdens. You want to stop money laundering and go after that type of problem? Draft a specific bill that addresses those issues but not one that harms small business and puts more burden on our back right now in a pandemic.’ My number one concern is taking care of the employees’ safety and taking care of their livelihood – doing what we can to keep our employees employed.”
The so-called Corporate Transparency Act, if it becomes law, would create a new, periodic reporting requirement for nearly every small business with 20 or fewer employees. More than 4.9 million of America’s small corporations and limited liability companies (LLCs) would be required to provide personal ownership information to the U.S. Treasury’s FinCEN bureau and update the information when any information changes.
The paperwork includes the personally identifiable information of business owners – full legal names, dates of birth, addresses, and driver’s license numbers or passport numbers – and the legislation grants broad access to the information to federal, state, local, or tribal law enforcement agencies without the need for a subpoena or warrant. A business owner’s failure to provide completed and updated paperwork would be a federal crime with civil penalties up to $10,000 and criminal penalties of up to three years in prison.
Fortunately, the burdensome reporting requirement was not included in the Senate defense bill.
Next week and the following, we expect a conference committee of U.S. Representatives and Senators will reconcile the House and Senate defense bills into one final bill, and in the process of combining them, the committee will decide whether to include this new small business mandate in a final bill that will likely become law.
NFIB opposes including this massive new small business regulation that is completely unrelated to defense spending, and we’re asking NFIB members to tell legislators that small business owners do not need a new paperwork reporting requirement, during a pandemic, buried in the defense bill.