With the Corporate Transparency Act’s new reporting requirements set to take effect beginning January 1st, Main Street is asking Congress to pump the brakes on this ill-conceived law.  

letter signed by more than 80 trade associations — including NFIB, the National Association of Wholesaler-Distributors, and the Real Estate Roundtable – calls on Congress to enact the Protecting Small Business Information Act of 2023 (H.R. 4035). Authored by House Financial Services Committee Chairman Patrick McHenry, the legislation would delay implementation of the CTA until Treasury finishes the necessary rulemaking process, giving affected businesses much-needed relief from the poorly conceived and drafted rules. As the letter states: 

Your legislation offers a commonsense solution to this pending regulatory trainwreck. By delaying the reporting requirements from taking effect until Treasury finalizes its rulemaking process, the Protecting Small Business Information Act would provide tens of millions of law-abiding Americans the certainty they need to comply with the new statute, as well as giving Congress more time to rethink this whole approach. 

As we’ve written previously (here, here, and here), the CTA will subject tens of millions of small businesses and other entities to increased paperwork, compliance costs, privacy risks, substantial fines, even jail. It was sold as helping law enforcement officials crack down on money laundering, but its reliance on unverified self-reporting means the criminals will simply take a pass and place the entire reporting burden on the shoulders of law-abiding small business owners. 

To add insult to injury, the Treasury Department plans to start collecting this information en masse beginning next year, despite its failure to finalize all the rules and education necessary to make it work. As our letter points out:  

…the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is ill-prepared to implement and administer the new reporting regime. As your recent letter to Secretary Janet Yellen made clear, FinCEN has yet to lay out a clear plan for engaging affected businesses to convey their upcoming responsibilities. The agency is also woefully behind in promulgating the key rules necessary to implement the CTA. Despite a looming effective date of January 1, 2024, federal regulators have yet to finalize the “Access Rule,” which specifies who can access the database and for what purposes, as well as an updated “Customer Due Diligence Rule” which applies to financial institutions.  

 S-Corp’s preferred approach to the CTA is to repeal it altogether, and we continue to support a constitutional challenge which would obviate the entire law. But with an implementation date fast approaching, any relief from the new law would be welcome news for the Main Street business community.  

Click Here to Download a Full Copy of the Letter