H.R. 2513, the Corporate Transparency Act of 2019, would require nearly every small business with fewer than 20 employees to file new reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which include:
- Existing businesses within 2 years of enactment
- New businesses at incorporation
- Every business annually
The legislation requires the Treasury Department to keep the beneficial ownership information (which includes the names, dates of birth, addresses, and driver’s license numbers or passport numbers of anyone with an ownership stake in the business) in a federal database for the life of the business plus five years and grants broad access to the information to federal, state, local, or tribal law enforcement agencies for virtually any reason through a simple request. The potential for improper disclosure or misuse of the private information increases as the number of people with access to the information increases.
Failure to comply with this legislation would be a federal crime with civil penalties of up to $10,000 and criminal penalties of up to 3 years in prison.
NFIB opposes the Corporate Transparency Act. In a recent NFIB Member Ballot, 80 percent of small business owners opposed Congress requiring small business owners to file paperwork with the Department of Treasury each time they form or change ownership of their businesses.
NFIB members rank federal paperwork as the 12th biggest problem, out of 75 issues, they encounter as small business owners.
On June 20, NFIB’s Karen Harned testified before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on “Outside Perspectives on the Collection of Beneficial Ownership Information.”
On June 11, the U.S. House Committee on Financial Services had a full committee mark up. Click here to watch the video.
Small businesses often file paperwork themselves. Just over half of small business owners personally handle the business’s financial paperwork and record-keeping, and 15 percent of owners delegate those responsibilities to an employee. Time and money spent filing paperwork with the federal government detracts from growing their businesses and creating jobs.
There are 5,305,960 small businesses with fewer than 20 employees. The owners of millions of small businesses across the United States do not have time or resources for new reporting requirements.