Beneficial Ownership in House NDAAJuly 22, 2020
On July 20, Rep. Carolyn Maloney’s (D-N.Y.) Corporate Transparency Act amendment passed in the En-Bloc number 1 package to H.R. 6395, the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (NDAA). The amendment can be found here. This is devastating news to the millions of small-business owners who will be faced with an additional $5.7 billion in regulatory paperwork. NSBA and our coalition partners have been urging lawmakers to oppose the Corporate Transparency Act amendment, highlighting that it will impose burdensome, duplicative reporting burdens on the smallest businesses in the U.S. and it threatens the privacy of law-abiding, legitimate small-business owners.
The House passed H.R. 2513 by a vote of 249-173 on October 22, 2019. The Corporate Transparency Act would require small businesses 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 (FinCEN) upon the creation of the business and periodically for the life of the business. Failure to comply would be a federal crime with civil penalties up $500 per day to $10,000 and criminal penalties of up to three years in prison.
Millions of small 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 having to obtain a subpoena.
NSBA supports efforts to stem money laundering, but this is the wrong way to do it, especially when you consider that the information is already being collected. Congress could easily require information sharing between FinCEN and the IRS – something already permitted for certain law enforcement purposes. Click here for more background.
NSBA is disappointed that the House passed this amendment with minimal debate by attaching a non-germane amendment to the must-pass NDAA. Since the Senate Crapo/Brown amendment was not included in the Senate version of the NDAA, it means that the Corporate Transparency Act will eventually go to Conference with no Senate counterpart. This allows for an opportunity for it to be removed out of the Conference Committee report—which NSBA will continue to push for its exclusion.
Please take a few moments today to contact your lawmakers TODAY!