
Amid confusing and sometimes frustrating legal challenges to the Corporate Transparency Act, a bipartisan bill seeks to mitigate some of that confusion and frustration by delaying the law’s beneficial ownership information reporting deadline.
On Tuesday, Jan. 28, Rep. Zach Nunn, R-Iowa, introduced the Protect Small Business from Excessive Paperwork Act. If the bill is signed into law, the deadline for the Corporate Transparency Act’s beneficial ownership information reporting requirement will be extended to Jan. 1, 2026, for most small businesses.
A one-year delay would provide more time not only for informing affected small businesses of the new reporting requirements but also for federal courts to resolve cases that could permanently kill the law.
Rocky start to the Corporate Transparency Act
Beneficial ownership information reporting has been marred by litigation and outrage from stakeholders and lawmakers.
The Corporate Transparency Act required small businesses formed before Jan. 1, 2024, to file a beneficial ownership information report by Jan. 1, 2025. Businesses formed after Jan. 1, 2024, had a 90-day window to file. More information about the new law and its reporting requirements can be found here.
Stakeholders criticized the federal government’s lack of public outreach. Last, July a coalition of more than 100 trade associations representing a large variety of industries urged Congress to delay the beneficial ownership information reporting deadline. The groups claimed that very few companies have complied because very few companies were aware of the new law.
“Although filing under the (Corporate Transparency Act) began at the start of this year, only a few million businesses have registered, while an estimated 28 million covered small businesses have yet to file,” the coalition letter states. “This compliance rate of less than 10 percent is a direct result of the general lack of awareness among business owners regarding the new rules.”
In December, a federal court struck down the Corporate Transparency Act, effectively taking small businesses off the hook to file a beneficial ownership information report less than a month before the deadline. A series of subsequent, conflicting court orders at all levels, including the Supreme Court, caused confusion in the days before and after the original Jan. 1 deadline.
As of Wednesday, Jan. 29, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), the agency overseeing the Corporate Transparency Act, has confirmed that beneficial ownership information reporting is not required. However, the agency encourages companies to file a report voluntarily at FinCEN.gov/boi.
Lawmakers step in
While the courts hear the legal challenges, some in Congress want to provide more certainty.
Nunn’s bill simply changes one line within the Corporate Transparency Act that would extend the beneficial ownership information reporting deadline by one year. That extension applies only to businesses formed before Jan. 1, 2024.
Companies formed last year had a 90-day window to file a beneficial ownership report. The clock starts once a company receives notice of creation or registration. Any small business formed after Jan. 1 of this year has 30 days to file.
With the Corporate Transparency Act on pause, new companies do not have to file. Since the Protect Small Business from Excessive Paperwork Act applies only to older companies, even if it is signed into law, newer companies will still be required to file a report within 30 days if the injunction on the Corporate Transparency Act is lifted.
According to the National Federation of Independent Businesses, 80% of its members have never heard of beneficial ownership information reporting. The bill is being backed by the association, as well as the National Small Business Association and U.S. Chamber of Commerce.
“America’s small-business owners have been on an unwelcome roller-coaster ride with the various lawsuits across the country, wondering when and whether they need to comply,” National Small Business Association President Todd McCracken said in a statement. “I cannot stress how important some kind of certainty is on filing these beneficial ownership information reports, and Congressman Nunn’s bill would do exactly that.”
Whereas Nunn’s bill merely pushes back the beneficial ownership information reporting deadline, another bill in Congress aims to get rid of it for good.
On 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. If it is signed into law, beneficial ownership information reporting requirements will be taken off the books completely.
“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.”
Democrats appear to have no appetite to completely undo beneficial ownership information reporting. The Repealing Big Brother Overreach Act has 25 co-sponsors in the Senate and 86 in the House, all Republicans.
However, both sides of the aisle appear to be open to delaying reporting requirements. The Protect Small Business from Excessive Paperwork Act was co-led by three other House reps, including two Democrats: Kansas Rep. Sharice Davids and North Carolina Rep. Don Davis. LL
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