Small businesses would face significant regulatory costs and serious privacy risks under the legislation
WASHINGTON, D.C. (Oct. 21, 2019) — Thirty-six business groups today urged members of the U.S. House of Representatives to vote “no” on the Corporate Transparency Act of 2019 (H.R. 2513), a bill that would saddle America’s smallest businesses with an additional 131.7 million hours of paperwork over the first 10 years at a cost of $5.7 billion.
The legislation treats small business owners as criminals by threatening them with jail time and oppressive fines for paperwork violations, and, worse, puts the personal information of small business owners at serious risk. The NFIB-led coalition made their case clear through a letter to Capitol Hill urging members of the United States House of Representatives to vote “no” on the bill.
“Three dozen associations representing a wide swath of the economy have come together to oppose this effort that singles out small businesses and levies significant fines and jail time for paperwork violations under a new regulatory mandate that the Congressional Budget Office estimates would require 25 to 30 million new reports every year,” said Brad Close, NFIB’s Senior Vice President, Public Policy.
“We are supportive of efforts to curb money laundering, terrorism, and other criminal activities, but this bill is not the answer,” Close said. “Small business owners cannot afford the additional compliance costs or serious privacy risks that come with this legislation.
“We are proud to have industry groups, trade associations, and organizations that represent millions of small business owners from home builders to restaurant owners to mom-and-pop retail shops nationwide join us in opposition,” Close said. “We urge members of the United States House of Representatives to vote ‘no’ on H.R. 2513.”
The coalition has been meeting with lawmakers from across the country urging them to oppose this legislation. The business groups will continue their efforts to prevent this legislation from being signed into law through targeted advocacy, grassroots mobilization, and sustained congressional outreach.
The Corporate Transparency Act of 2019 would require small corporations and limited liability companies with 20 or fewer employees to complete and submit annual paperwork which includes the personally identifiable information of each business owner to the Treasury Department’s Financial Crimes Enforcement Network upon the creation of the business and periodically for the life of the business. Failure to comply is a federal crime with civil penalties up to $10,000 and criminal penalties of up to three years in prison.
In its review of the bill, the nonpartisan Congressional Budget Office wrote, “Because of the high volume of businesses that must meet the new reporting requirements and the additional administrative burden to file a new report, CBO estimates that the total costs to comply with the mandate would be substantial.” The Corporate Transparency Act would generate between 25 million to 30 million new reports annually.
A recent NFIB study found that, under the Corporate Transparency Act, small businesses would face $5.7 billion in new regulatory costs and an additional 131.7 million hours of paperwork if the legislation is signed into law.
More than 4.9 million businesses would be required to provide personal ownership information to FinCEN on an annual basis. The Treasury Department would be required to retain the information for the life of the business plus five years. Furthermore, the legislation grants broad access to the information to federal, state, local, or tribal law enforcement agencies without even having to get a subpoena.
To read more on NFIB’s efforts to protect small business privacy, visit https://nfib.com/protectprivacy.