Today, the Wall Street Journal Editorial Board published an opinion piece discussing the effects of the Corporate Transparency Act's (CTA) Beneficial Ownership Information reporting requirements on small businesses. The board is calling for Congress to repeal the CTA to alleviate these burdens.
The editorial states: "In 2020 Congress tucked the CTA into the National Defense Authorization Act in the last days of the Trump Administration and it passed over Mr. Trump’s veto. The intent was to combat money launderers and drug dealers. But the result, says the National Federation of Independent Business, is a bill that imposes another compliance burden, makes confidential business data less secure, and does little to deter real criminals."
The law, which came into effect on January 1st of this year, mandates that corporations or limited liability companies with fewer than 20 employees and $5 million or less in revenue must disclose details about their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Non-compliance can lead to penalties including up to two years in prison and a $10,000 fine.
"What’s next? The Biden Administration has asked the Fifth Circuit Court of Appeals for a stay of Judge Mazzant’s injunction. It also wants the appellate court to rule by Dec. 27, so that businesses would still have to meet the reporting deadline of Dec. 31," reads another part of the op-ed.
The editorial further argues: "But Congress needn’t wait for courts to remove this looming burden from millions of small businesses. This is the kind of unnecessary regulation that Republicans campaigned to stop. A one-year delay is already under consideration as an amendment to the year-end spending bill being debated in Congress. Congress can adopt this amendment, deliver relief to small business, and give the courts the time they need to resolve this mess."
In response, a lawsuit filed by NFIB resulted in a federal court issuing a preliminary injunction against FinCEN's enforcement of these reporting requirements under CTA. NFIB supports legislation known as Repealing Big Brother Overreach Act aimed at permanently relieving small businesses from these obligations.
Read more about this issue in full at: https://www.wsj.com/opinion/corporate-transparency-act-judge-amos-mazzant-small-business-donald-trump-df6162f0?mod=opinion_lead_pos4
