A group of Republican members of Congress are urging the U.S Treasury and its Financial Crimes Enforcement Network (FinCEN) to delay in the implementation of new beneficial ownership reporting requirements for small businesses.
The new beneficial ownership reporting requirements under the Corporate Transparency Act (CTA) go into effect on Jan. 1. The CTA requires most corporations, limited liability companies, and other entities created in or registered to do business in the United States to regularly report information about their beneficial owners to FinCEN.
While the goal of the law is to target shell companies involved in illicit financial transactions, the CTA defines covered entities as those having 20 or fewer employees and under $5 million in revenue. This would impact some 32.6 million small businesses who are largely unaware of the new requirements that carry penalties for non-compliance.
“Unfortunately, FinCEN is woefully behind in educating small business owners and stakeholders of their new obligations under the CTA that begin in just a few short weeks. In fact, a National Federation of Independent Business (NFIB) survey found that 90 percent of respondents were entirely unfamiliar with these reporting requirements. Even more concerning is that the CTA has civil and criminal penalties of up to $10,000 and two years of jail time for failure to comply,” the lawmakers wrote to Treasury Secretary Janet Yellen and FinCEN Director Andrea Gacki.
The letter was signed by 76 members of Congress, including House Financial Services Committee Chairman Patrick McHenry (R-NC), U.S. Rep. Warren Davidson (R-OH), U.S. Sen. Rick Scott (R-FL), and U.S. Sen. Mike Rounds (R-SD).
“This lack of awareness and education is alarming and must be addressed before the law is implemented. Dozens of organizations, representing millions of small businesses operating in every state and community across the country, have already publicly expressed their strong support for delaying implementation of the beneficial ownership information (BOI) reporting requirements by one year.”
Thus, the lawmakers asked the Treasury and FinCEN to delay the effective date by at least one year.
“We believe a year’s delay will provide FinCEN and the business community with more time to educate owners of their new obligations. It will also give FinCEN time to review the new rules and improve and finalize the statute’s regulatory framework. Thank you for your prompt attention to this important matter,” they concluded.