Last week in some less-than-transparent legislative maneuvering, the U.S. House and Senate passed the so-called Corporate Transparency Act buried in the National Defense Authorization Act (NDAA) Conference Report. With its passage, America’s smallest businesses will be saddled with millions of new paperwork hours in the coming years.
The Corporate Transparency Act provision within the NDAA Conference Report requires corporations and limited liability companies (LLCs) with 20 or fewer full-time employees to file new reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) containing the personally identifiable information of small business owners and update that information periodically. The provision raises privacy concerns for small business owners as it establishes a first-of-its-kind federal registry of small business owners.
In a statement following the passage of the bill, Vice President of Federal Government Relations Kevin Kuhlman said, “…this legislation contains the Corporate Transparency Act, which is unrelated to the defense bill and creates a burdensome regulation for small businesses that are already struggling due to the COVID-19 pandemic. This legislation would burden small businesses with 12.2 million new initial paperwork hours at a cost of $531 million, something small business employers simply cannot afford as they deal with the ongoing COVID-19 pandemic.”
Kuhlman added, “According to NFIB research, one in five small businesses said they would have to close their doors if current economic conditions don’t improve. Now is not the time for Congress to add regulation that will require more paperwork from owners when they are working hard to stay open.”
NFIB and small business owners have been advocating against this new paperwork mandate since it surfaced three years ago. NFIB’s advocacy efforts included business owners urging their legislators to side with Main Street instead of big banks. Thanks to NFIB’s lobbying and thousands of activists who sent messages to Congress, we successfully defeated the Corporate Transparency Act several times.
The three-year advocacy campaign also effectively delayed the bill’s passage and ultimately forced legislators to make improvements to the legislation. The new mandate’s passage last week came this time in large part because it was expedient for some lawmakers and interest groups to side with some in the banking industry. Its success this time was also because it was packaged into a must-pass funding bill for the nation’s military, meaning transparent debate of the mandate and its specific impact were buried.
NFIB is the leading voice of the business community on this issue, while several other business groups actively worked against the interests of small businesses. Even with the improvements NFIB was able to secure on behalf of small businesses, NFIB strongly opposes the legislation that was ultimately passed. We will work to repeal the mandate.
In the meantime, we’ll bring America’s small business owners clear guidance on what’s needed to comply with the forthcoming paperwork mandate and mitigate the burdens on small businesses during the regulatory process. Non-compliance comes at the risk of steep criminal and civil penalties.
If you’re disappointed in Congress burying a harmful small business provision in an unrelated bill, tell them here.
When NFIB surveyed its membership concerning beneficial ownership reporting, 80% opposed the idea of Congress requiring small business owners to file paperwork with the Treasury Department each time they form or change ownership of a business. Jim Henderson, an NFIB member in Missouri, encouraged fellow 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 businesses 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.” Hear more from Jim here in a short video.