NFIB Fighting To Improve The Mandate’s Rollout
The federal government is moving to implement the so-called “Beneficial Ownership” mandate before the end of the year. NFIB is already influencing the implementation process to lessen the harm to small business.
The Treasury Department, under Secretary Janet Yellen, has said this mandate is “a very high priority” for her. It is also a priority issue for NFIB. NFIB has long fought beneficial ownership mandates, defeating multiple versions in recent years. However, some lawmakers attached the mandate to must-pass defense legislation at the end of 2020.
“We’ve beaten beneficial ownership many times,” said Kevin Kuhlman, Vice President of NFIB’s Federal Government Relations. “Even though it passed Congress in the least transparent way last December, we continue the fight to protect small business owners.”
The mandate passed as part of the National Defense Authorization Act shortly before the end of the year. Under the final legislation, corporations and limited liability companies with 20 or fewer full-time employees will be required 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 legislation creates a first-of-its-kind federal registry of small business owners, raising serious privacy concerns for owners.
Beneficial ownership burdens small business with additional compliance costs and red tape at a time when Main Street can least afford it, during the coronavirus pandemic. NFIB research shows the mandate will lead to 12.2 million paperwork hours and at least $531 million in higher costs. Four out of five NFIB members oppose the mandate for violating their privacy and hurting their companies.
While the mandate passed at the end of 2020, the Treasury Department has until the end of 2021 to fully implement it. The law says that regulations must “be promulgated not later than 1 year after the date of enactment.” The department is drafting regulations to create a process for small businesses. The regulations could be released at any point before the end of the year.
Once final rules are published, existing companies will have up to 2 years to comply and submit the relevant personal information to FinCEN, though that timeline could be shorter. The law says that existing companies must file reports, “in a timely manner, and not later than 2 years after the effective date of the regulations.” New companies will receive no grace period: They will have to file with FinCEN immediately after regulations are finalized.
As Treasury begins drafting regulations, NFIB is highly engaged and holding regulators accountable. On NFIB’s behalf, Senator Pat Toomey has secured a commitment from Secretary Yellen to consult with small businesses during the drafting process.
This is only a start. All regulations will require a “comment period” in which small businesses and outside groups can submit their feedback and concerns. NFIB is preparing to mobilize an army of small business owners to make their voices heard. The goal will be to make the final mandate as affordable and respectful of small business time as possible.
Kevin Kuhlman issued a call-to-action to small business: “The beneficial ownership fight isn’t over. It’s just getting started, and to make victory possible, every small business needs to speak out.”
You can make your voice heard today with NFIB’s Action Alert in a message to Congress: Congress Passed Harmful Small Business Regulation: Express Your Disappointment.