As the Corporate Transparency Act continues to suffer major blows in federal courts, Republican lawmakers are trying to kill the law that requires beneficial ownership information reporting through legislation.
On Wednesday, Jan. 15, Sen. Tommy Tuberville, R-Ala., and Rep. Warren Davidson, R-Ohio, reintroduced the Repealing Big Brother Overreach Act, which attempts to eliminate the Corporate Transparency Act. Effective since last January before it was struck down in federal court, the latter requires small businesses to report what is called beneficial ownership information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
“The Financial Crimes Enforcement Network (FinCEN) infringes (on) American small business owners’ privacy rights by forcing them to disclose sensitive information to the government,” Davidson said in a statement. “The (Corporate Transparency Act) is a disaster for small businesses and must be repealed immediately.”
Over the past year, the Corporate Transparency Act has been heavily criticized by lawmakers and a wide range of business groups, from veterinarians to funeral directors to roofing contractors. In addition to claims that the required beneficial ownership information reporting is unlawful, stakeholders have argued that a lack of communication from the federal government has led to very few small-business owners being aware of the new rules.
Last July, a coalition of more than 100 trade associations urged the Senate Committee on Banking to delay implementation of the Corporate Transparency Act.
More than halfway through the year, the coalition claimed that less than 10% of affected businesses had complied with beneficial ownership information reporting requirements. They argued more time was needed to properly inform business owners.
At the time, Sens. Tim Scott, R-S.C., and James Lankford, R-Okla., introduced amendments to the FY2025 National Defense Authorization Act that would provide more time to educate small-business owners about the new reporting requirements. Those amendments never passed.
Last April, Davidson introduced the Repealing Big Brother Overreach Act in the House. It died in committee with 100 co-sponsors, all Republicans. Tuberville introduced a companion bill in the Senate. That bill attracted 18 Republican co-sponsors but also died in committee.
Tuberville and Davidson’s second bite at the apple to undo the Corporate Transparency Act has garnered more interest and has a better chance of success. Right out of the gate, the Senate bill has 24 co-sponsors. Davidson’s bill has 68 original co-sponsors, far more than the 11 co-sponsors last year’s bill received when it was introduced. With Republicans having control of the House and Senate, the congressional environment is more favorable for the bill.
The two bills come after a tumultuous court battle that left small-business owners confused just days before the original Jan. 1 deadline to report beneficial ownership information.
On Dec. 3, 2024, a federal district court in Texas struck down the Corporate Transparency Act less than a month before businesses had to file. However, the Fifth Circuit Court of Appeals reversed that order on Dec. 23, putting small-business owners back on the hook with just a week left. But three days later, a different Fifth Circuit panel reversed that reversal, killing the Corporate Transparency Act just days before the deadline.
That Dec. 26 order taking business owners off the hook to file beneficial ownership information stands. However, the federal government is asking the Supreme Court to revive the Corporate Transparency Act. As of Thursday, Jan. 16, the high court has not indicated whether it will intervene. More than a dozen amicus briefs have been filed, all of which oppose the federal government’s bid. Among those who filed amicus briefs are federal lawmakers, including Davidson.
In the meantime, Tuberville and Davidson are trying to settle the debate in Congress.
“The (Corporate Transparency Act) requirements that dictate (small-business owners) must share personal data or pay a fine and spend time in jail does nothing but stifle increased economic growth,” Tuberville said in a statement. “This unprecedented intrusion into personal privacy is something you’d expect in Communist China, but not in the United States of America. I’m thankful that the Supreme Court is now deciding the legality of the (Corporate Transparency Act) requirements, but we need to ensure that our business owners never have to worry about this again.” LL
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