NFIB Vice President of Federal Government Relations Jeff Brabant recently discussed the impact of Beneficial Ownership Information (BOI) reporting requirements on small businesses during an appearance on The Lars Larson Show. Brabant explained that these regulations target companies with 20 or fewer employees, requiring them to disclose personal and business information about anyone owning more than 25% of the company, as well as those who substantially control the business.
According to Brabant, "So, if you’re a business with 20 or fewer employees – and this only applies to small businesses, those with 20 or fewer employees – what this regulation would do is say you have to prove to the government who your beneficial owners are. So, if you own more than 25% of the company, you have to file your personal contact information, your home address, your business address, a copy of your driver’s license, with the Financial Crimes Enforcement Network, which is the intelligence agency that investigates money laundering and financial crimes. And not only does it require the actual owners; it requires anyone who substantially controls the company, which is really loosely defined by FinCEN to even mean a general manager of a restaurant, who has zero percent ownership stake and is just a salaried employee would have to do it. So, any senior staff would have to do it. And the scary thing is, okay, I start a new business, I report my senior staff, what’s the big deal? It’s a lifetime commitment, and if you forget to update your information within 30 days of anything changing, you can go to jail for two years or get fined up to $10,000.”
Brabant also raised concerns about long-term risks for small businesses under these requirements: “And the fact that you’re putting this many American small businesses at risk is terrifying for a lot of small businesses. And Lars, I know this is a really scary thing, but one thing I do want to point out is that earlier this spring, President Trump exempted American small businesses. He looked at this and said this is a terrible idea and to use his words from a social media post about this, he called them an ‘absolute disaster’ for small business and an ‘economic menace’ when he exempted small businesses. But we’re not out of the woods just because the president exempted American small businesses. This passed years and years ago on a defense bill… as part of a statute of the Corporate Transparency Act. And that’s still on the books. So, a future president, when Donald Trump’s not president one day, can come in and put it right back into effect so what we’re doing is saying to Congress, ‘Hey, just because President Trump saved us for the next three, four years doesn’t mean we’re permanently out of the woods for 32 million American small businesses. You guys need to act, and you need to repeal this right away.’”
NFIB has opposed BOI reporting regulations in legislative bodies and federal courts for over six years in efforts aimed at blocking or repealing them entirely. The organization warns that without full repeal by Congress through action such as overturning sections of the Corporate Transparency Act, approximately 32 million U.S. small businesses could again face criminal penalties including imprisonment up to two years or fines up to $10,000.
The NFIB describes itself as nonprofit and nonpartisan with over eight decades advocating for independent business owners nationwide.
