Vote on NDAA Expected SoonNovember 25, 2020
The final stretch of the National Defense Authorization Act (NDAA) has begun and it will be an uphill climb toward the goal of preventing the new burdensome reporting mandates on small-business owners. Unfortunately, one particularly problematic piece of legislation, so-called “beneficial ownership” was included in the House-passed version of the NDAA.
In recent years, the NDAA has attracted numerous, often controversial, and sometimes non-germane floor amendments, though few receive floor time. This year was no different, and NSBA is concerned about the potential inclusion of a new small business mandate that would impact businesses with 20 or fewer employees. Rep. Carolyn Maloney’s (D-N.Y.) Corporate Transparency Act amendment passed in the En-Bloc number 1 package to the NDAA (H.R. 6395).
The inclusion of this amendment is devastating news to the millions of small-business owners who will be faced with an additional $5.7 billion in regulatory paperwork. Throughout the process, NSBA has urged 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.
Beneficial ownership provisions would require ONLY the smallest businesses to file new reports and register significant personal identifying information for all owners—including their names, dates of birth, and addresses with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) detailing all “beneficial owners” of the company. Failure to comply with these reporting requirements would be a federal crime with civil penalties of $500 per day up to $10,000 and criminal penalties of up to 4 years in prison.
The NDAA Conference Agreement is likely to be considered during the week of Nov. 30 or Dec. 7.
While Rep. Maloney’s amendment was included in the House-passed bill, Sens. Mike Crapo (R-Idaho) and Sherrod Brown (D-Ohio) drafted an amendment to the Senate NDAA but it did not receive consideration. No amendment was included in the Senate-passed NDAA.
Recently, House Financial Services Committee Ranking Member Patrick McHenry (R-N.C.) – in exchange for his sign-off/support – was able to extract some marginal improvements to the amendment including new government reporting and slightly more secure access to the FinCEN database. However the fundamental structure of the new small business reporting burden and threats of significant penalties remain (civil penalties up to $10,000 and criminal penalties up to 3 years in prison).
Congressman McHenry was limited in what he could negotiate because House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) and their Senate counterparts, Sens. Chuck Grassley (R-Iowa) Ron Wyden (D-Ore.) have already indicated their willingness to support the beneficial ownership provision.
NSBA remains opposed to the legislation and opposes inclusion of the amendment in the unrelated NDAA. Along with our coalition partners, we will be lobbying conferees to exclude the controversial provision from the NDAA.
Please visit NSBA’s action center and contact your lawmakers TODAY to express your opposition to the Beneficial Ownership Amendment in NDAA Conference Report.