NFIB sends recommendations to Treasury Department on regulatory overreach of proposed rules
Small business owners and NFIB have long raised concerns about a federal reporting issue that passed Congress in late 2020, known as the Corporate Transparency Act. The U.S. Department of Treasury has now begun rulemaking to implement the Corporate Transparency Act and the proposed rules continue to be extremely concerning for small business owners. In a letter last week to the Treasury Department, NFIB recommended a series of adjustments to protect small businesses from the overreaching proposed regulations.
“The proposed rules will further challenge struggling small businesses with new paperwork requirements and will create a first of its kind federal registry of small business owners, which is a privacy concern for many,” explains NFIB Vice President of Federal Government Relations Kevin Kuhlman. “The proposed regulations overreach on who must file, when they must file, and what information they must provide.”
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.
A beneficial owner is defined as anyone who owns 25% or more of the ownership interests of a reporting business, or an individual who has substantial control over a reporting business. The Treasury Department estimates the proposed rules to implement the Corporate Transparency Act will require more than 25 million existing small businesses to spend an aggregate of more than $4 billion to submit reports on their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). In reality, the compliance costs are likely to be substantially higher.
NFIB opposed the Corporate Transparency Act, which requires corporations and limited liability companies (LLCs) with 20 or fewer full-time employees to file new reports with the Treasury Department’s FinCEN bureau containing the personally identifiable information of small business owners.
“Treasury and FinCEN propose to expand the definition of beneficial owner beyond the statute and previous regulations; propose insufficient time for small business owners to file and update reports; and propose small business owners report more personal information than Congress intended,” Kuhlman said. “At the same time, Treasury and FinCEN fail to clarify exactly which types of businesses must file, ultimately resulting in small businesses being forced to seek legal advice before filing paperwork.”
NFIB recommends the following adjustments:
- FinCEN should give the public the opportunity to comment contemporaneously on the rules for FinCEN collection of beneficial ownership information (BOI) and FinCEN safeguarding of BOI, and the safeguarding rules should take effect before FinCEN collects BOI.
- FinCEN should lengthen the deadlines for small businesses to report BOI to FinCEN.
- FinCEN should recognize that small businesses cannot report changes to FinCEN until they become aware of the changes.
- FinCEN should recognize that reporting companies can only certify accuracy and completeness of reports to the extent of their knowledge.
- FinCEN lacks authority to seek or compel provision of more BOI than the law specifies.
- FinCEN should tailor the list of officers presumed to have substantial control of a reporting company.
- FinCEN should emphasize assistance-with-compliance over punishment-through-enforcement in administrating the BOI regime.
- FinCEN should state clearly that exempt entities and sole proprietors have no BOI reporting duties.
- The President, the Secretary of the Treasury, and the Director of National Intelligence should apply to FinCEN, as an agency focused on collection of massive amounts of intelligence on American citizens, the safeguards that apply to other U.S. intelligence agencies.
Take action and make your voice heard by directly filing a comment on the impact these reporting rules will have on your business.
