Today the S Corporation Association joined with 150 of its trade association allies to support legislation to delay the Corporate Transparency Act’s year-end reporting deadline.
The bill, H.R. 9278, was introduced by Iowa Congressman Zach Nunn (R) and enjoys bipartisan support. Its purpose is straightforward – provide much-needed relief to tens of millions of small businesses and other entities subject to the CTA’s reporting requirements. As the letter notes:
The CTA is unique in that it explicitly targets the very companies least equipped to shoulder its regulatory burdens. Among its various exemptions, the statute includes a carve out for entities whose revenue exceeds $5 million and which employ more than 20 full-time employees. Companies not meeting those thresholds – essentially every small business currently operating in America today – must comply. FinCEN estimates that more than 32 million such entities will be affected by the new law just this year, with an additional 6 million each subsequent year as new businesses are formed.
Although filing under the CTA began at the start of this year, FinCEN reports it has received just 10 percent of required submissions. This compliance rate can be attributed directly to the general lack of awareness among the small business community when it comes to the new rules. Given this massive education gap, it is clear additional time is needed for regulators and other stakeholders to continue their outreach to affected small businesses.
The Nunn bill is in keeping with legislation (H.R. 5119) passed by the House last year in a near-unanimous vote of 420-1. So why the need for another bill?
Despite that overwhelming show of support, H.R. 5119 remains stalled in the Senate due to opposition from Banking Committee Chairman Sherrod Brown (D-OH). At this point the senator is the only thing standing between 30 million small businesses and a one-year reprieve from the CTA’s onerous reporting requirements.
While the courts may ultimately save the day and strike down the CTA for good, the Main Street business community can’t afford to sit idly by and wait for that outcome. The delay effort is important because it would allow the legal process to play out in full, while giving federal regulators additional time to educate businesses about the new law. It’s a win-win, commonsense approach to this challenge.