Lawmakers Seek to Repeal Corporate Transparency Act
Republicans are proposing to repeal the Corporate Transparency Act, saying the 2021 law has overburdened small businesses.
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Rep. Warren Davidson, R-Ohio, introduced a bill last week that would repeal the CTA. Sen. Tommy Tuberville, R-Ala, said May 2 that he plans to introduce similar legislation, the Repealing Big Brother Overreach Act, this week.
The Financial Crimes Enforcement Network’s new beneficial ownership information (BOI) reporting rule (see 2401050023), which is mandated by the CTA, requires many companies to submit information on who owns and controls them. It is designed partly to help the government prevent sanctioned parties and others from hiding money or property in the U.S. (see 2312210017).
But Republicans have argued that the rule is too complicated and invades personal privacy. They also have said that most business owners are unaware of the BOI reporting requirements or the significant penalties, including jail time, they could face for failing to file with FinCEN (see 2402140044). Tuberville said he’s also concerned that “politically-motivated prosecutors … will use the CTA to target conservative business owners” who fail to meet the reporting requirements.
At a House Small Business Committee hearing on CTA implementation on April 30, Timothy Opsitnick, executive vice president and general counsel of legal and cybersecurity services firm Technology Concepts & Design, testified that he would "like to draw your attention to FinCEN's 57-page small entity compliance guide, as well as the 45-page FAQ. A first-time entrepreneur looking to open a coffee shop, for example, must push through 102 pages of explanatory language to understand the reporting burden. Given permitting and other delays, it's entirely possible that our aspiring barista would have to act on all of this before a single cup of coffee was served to a customer, all under the threat of criminal sanctions."
On the same day as the hearing, FinCEN held a webcast to explain how to comply with the reporting requirements. A FinCEN official said that a BOI filing with FinCEN is usually a "one and done situation," unless information needs to be corrected or updated, and that companies with simple ownership structures should expect to spend 20 minutes or less to complete a filing.
A federal district court judge ruled in March that the CTA is unconstitutional (see 2404250069). The government is appealing.