Congress Should Cut An Anti-Small Business Mandate From Defense Spending
It’s nearly unheard-of that small business owners would find themselves urging Congress to remove a section from the national defense bill. But to prevent the federal government from further piling on regulatory burdens and eroding privacy protections for Main Street while businesses are struggling to survive a pandemic and government-mandated shutdowns, here we are. Congress is moving to pass the National Defense Authorization Act before year’s end. Unfortunately, this important bill includes the so-called Corporate Transparency Act that will hurt more than 4.9 million small businesses and put their privacy at risk.
NFIB is fighting around the clock to remove this bad provision from a bill that’s expected to pass because of its broad importance for national defense – a procedural strategy that advocates of the anti-small business mandate are counting on to bypass debate and amendments and ignore small business concerns.
NFIB Vice President of Federal Government Relations Kevin Kuhlman spoke strongly on this issue:
“It is wrong for Congress to try and pass this problematic small business mandate under the cover of funding the military. There is never a good time to stick small businesses with higher costs and jeopardize their owners’ privacy, but this is clearly the worst time and the least transparent strategy. NFIB has defeated this terrible idea before, and we’ll continue to fight for our members. Jamming this new paperwork mandate in the defense bill during a pandemic is the wrong policy in the wrong place at the wrong time.”
Are you a small business owner? Tell Congress today to remove the so-called Corporate Transparency Act from the defense bill.
The Corporate Transparency Act and similar proposals have been introduced several times in the past few years and fell short thanks to the work of NFIB and the voices of NFIB members nationwide.
The current amendment to the defense bill is modeled on the Corporate Transparency Act of 2019 and would mandate that nearly all businesses with 20 or fewer employees provide additional detailed personal information to the Financial Crimes Enforcement Network (FinCEN) on a regular basis.
The information would be available without a judicial subpoena or warrant to local, state, tribal, and federal law enforcement, which raises urgent privacy concerns that Congress has failed to address. Moreover, many states and other federal government agencies already store this information securely, so an additional federal mandate is unnecessary.
In addition to threatening privacy, the mandate would come with a high cost. NFIB research shows that this additional paperwork mandate will cost small businesses 13.2 million initial paperwork hours – that’s more than $570 million in initial new regulatory costs. It is one more regulatory burden, which constantly pile up and almost never go away.
The timing is also particularly bad. As they continue to deal with the COVID-19 pandemic and government-mandated shutdowns and restrictions, small businesses would rather spend that money and time on keeping their doors open, keeping workers employed, and preparing for a difficult future.
The cost of non-compliance with the mandate would be even higher: Failure to provide completed and updated paperwork could result in penalties of up to $10,000 and up to 2 years in prison.
NFIB has been leading the charge against the current proposal for months. This includes meetings with key senior lawmakers in both the House and Senate and grassroots campaigns that have mobilized thousands of NFIB members. NFIB member ballots show that 80% of small businesses oppose this mandate.
These efforts have already borne fruit: The mandate was not included in the Senate’s defense bill, though it did pass in the House of Representatives. As House and Senate negotiators meet in a conference committee to reconcile the two defense bills, NFIB is calling on all small businesses to make their voices heard and call their Members of Congress. The timing is urgent as the decision will be made this week.
Kuhlman continued: “Now is no time to burden businesses that are already weighed down by the challenges of 2020. Congress should abandon this idea immediately, or at least debate this proposal on its own, separate from defense spending. Either way, NFIB will hold lawmakers accountable for their actions.”