Today’s piece by the Washington Post Editorial Board is a helpful reminder that while the Corporate Transparency Act has been knocked down in the past year, the fight continues. As the Post summarizes, the CTA deserves to be repealed:
At a practical level, the law is ineffective because it adds a new reporting requirement to stop behavior that is already illegal. The businesses that would abide by the Corporate Transparency Act already follow the law, while criminals would ignore it or get around it.
In the meantime, the federal government will amass a database of millions of small businesses, as well as their owners and workers. As the government has repeatedly demonstrated its inability to properly secure data, even for its own employees, it ought to have a very good reason to collect such data in the first place.
The good news is there are three distinct opportunities to move towards a permanent fix of the CTA, starting with tomorrow’s markup in the House Financial Services Committee. Lawmakers are set to consider the Repealing Big Brother Overreach Act, led by Rep. Warren Davidson and cosponsored by 191 House members, along with an amendment requiring the existing beneficial ownership database be purged within 90 days. These measures ensure that the CTA is limited to foreign business owners only while protecting the personal information of the millions of small business owners who already reported.
Second on our list of CTA opportunities is the pending final rule expected out of Treasury any day now. This rule would lock in the reforms announced last Spring that limit the CTA’s scope to foreign-owned entities. The shift reflects a more risk-based approach to enforcement, one S-Corp and its Main Street allies have championed for years. We’re also keeping an eye on a recent House FSGG appropriations draft, which – unlike past efforts – would withhold funding from FinCEN until the rule is finalized.
Finally, there’s lots of activity at the court level. Readers will recall that the National Small Business Association successfully challenged the CTA in federal district court, only to see that decision reversed on appeal. Now, the case may be headed to the U.S. Supreme Court via a petition for certiorari filed last week, teeing up a potential landmark ruling on the scope of Congress’s authority. The NSBA case is one of a dozen lawsuits pending in various courts, providing SCOTUS with ample justification for taking up this important case.
So the Washington Post is our new ally in the fight to preserve privacy and to reduce needless, ineffective paperwork obligations like the CTA. They are a welcome addition to the team, and we look forward to celebrating a big CTA win with them soon. There are lots of opportunities for success here – we just need to get one of them across the finish line.