Today over 100 trade associations, representing millions of small businesses nationwide, strongly supported legislation introduced by Representative Warren Davidson (R-OH) to repeal the Corporate Transparency Act (CTA).

Appropriately named the “Repealing Big Brother Overreach Act”, the legislation would put an end to the onerous and poorly-conceived reporting regime that targets virtually every small business operating in America. That effort will also be joined by Senator Tommy Tuberville (R-AL), who plans to introduce a companion bill in the Senate early next week.

By way of background, the CTA took effect this year and requires small businesses and other covered entities to report the personal information of their owners and managers to the Financial Crimes Enforcement Network at the Treasury Department. As we’ve written extensively, the CTA saddles law-abiding business owners with compliance headaches and criminal penalties while doing little or nothing to combat illicit activity.

The letter signed by NFIB, The Real Estate Roundtable, the National Association of Wholesaler-Distributors, and dozens of other groups, makes clear that CTA is poor policy that needs to be reconsidered:

Despite its unprecedented scope, we expect the CTA to be of little practical use to law enforcement, as criminals are unlikely to accurately self-report their information to FinCEN.  Meanwhile, because the CTA targets entities with low revenues and few employees, the brunt of its reporting burden and excessive penalties will be shouldered by law-abiding, Main Street businesses.   

Last month, the District Court for the Northern District of Alabama ruled the CTA exceeded the Constitution’s enumerated powers and was therefore unconstitutional, but the resulting injunction applies to the plaintiffs only – members of the National Small Business Association. As a subsequent notice from FinCEN made clear, all other covered entities are still required to file their BOI reports by the end of the year.

The bill introduced by Congressman Davidson would put an end to this unprecedented data grab by repealing the CTA in its entirety. Repeal would give Congress the opportunity to craft a better approach that addresses our national security needs while balancing them with the interests and rights of law-abiding small business owners.

The introduction of this legislation coincides with a Tuesday hearing at the House Small Business Committee to examine the failed rollout of the CTA. As many lawmakers look for ways to implement minor improvements to the CTA, the Davidson bill is a helpful reminder that there is nothing so useless as improving something that shouldn’t be done in the first place. Congress should have never enacted the CTA.  This is an opportunity to address that mistake.

Click here to download a copy of the final letter