NFIB testifies on Beneficial Ownership Requirements and the regulatory landscape for small businesses
In two U.S. House committee hearings on July 18, 2023, NFIB Vice President of Federal Government Relations Kevin Kuhlman and Executive Director of the NFIB Small Business Legal Center Beth Milito advocated to ensure small business isn’t overlooked or harmed by upcoming legislation.
Kuhlman testified before the U.S. House of Representatives Committee on Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions in a hearing titled, “Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking.” The hearing addressed the beneficial ownership information requirements for small businesses.
“NFIB has long opposed beneficial ownership information (BOI) reporting requirements because the regulations impact only small businesses under the threat of severe penalties,” said Kuhlman. “BOI reporting requirements were buried in an amendment as part of a large and unrelated bill. The Financial Crimes Enforcement Network (FinCEN) has overreached in implementing the legislation, failing to both minimize reporting burdens on small businesses and provide clarity to small businesses. Finally, FinCEN is lacking in education and outreach to the small business community and few small businesses are aware of their requirements that begin in less than six months.”
The Corporate Transparency Act was signed into law in 2021 as part of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021. The Corporate Transparency Act is one of the most expansive small business regulations in history, affecting 32.6 million small businesses in the first year and five to six million small businesses every year thereafter, according to FinCEN’s estimates.
“Ultimately, NFIB believes Congress should repeal the Corporate Transparency Act and better target revised anti-money laundering laws,” said Kuhlman. “This legislation establishes a massive government dragnet with the personally identifiable information of 32.6 million law-abiding small business owners with the hope that criminal money launderers will fess up and admit that they are hiding behind shell companies.”
Milito testified before the U.S. House Committee on Education and the Workforce Subcommittee on Workforce Protections in a hearing titled, “Cutting Corners at WHD: Examining the Cost to Workers, Small Businesses, and the Economy.” Milito spoke on the financial and negative impact government regulations and red tape have on small businesses. Milito also testified about NFIB’s latest white paper, “The Regulatory Flexibility Act: Turning a Paper Tiger Into a Legitimate Constraint on One-Size-Fits-All Agency Rulemaking,” on ways Congress could lessen the regulatory burden they’ve placed on small businesses.
“If the question is, how should Congress and the President respond to the challenges facing small businesses? We believe legislators should look to the example laid by the Democratic-led 96th Congress and President Jimmy Carter,” stated Milito. “In 1980, President Carter and Congress recognized the disproportionate impact of federal regulations on small businesses and unanimously approved the Regulatory Flexibility Act (RFA). Upon signing the RFA into law, President Carter stated, ‘This bill adds another piece to the far-reaching regulatory reform record that we and the Congress are building.’”
The RFA was enacted to protect small businesses from one-size-fits-all rulemaking by federal agencies. Unfortunately, federal agencies routinely ignore the RFA’s requirements throughout the rulemaking process.
“The intent of the RFA was clear – when promulgating regulations, federal agencies must consider and minimize the impact of rules on small businesses. However, in the 40-plus years since the RFA became law, agencies have found ways to disregard or bypass many of the RFA’s requirements. In fact, NFIB’s Small Business Legal Center recently analyzed the Small Business Administration (SBA) Office of Advocacy’s comment letters to federal agencies from January 2021 to January 2023 and found significant noncompliance with the RFA. In these letters, Advocacy highlighted 29 instances where agencies failed to adequately examine the economic costs of regulations.”
Now is the time for members of Congress to support small businesses by working to strengthen the RFA. Take Action: Tell your lawmakers to support the Prove It Act and why the RFA is important to your small business.