A bill is expected to be introduced in Congress this week that would repeal the Corporate Transparency Act (CTA), a 2021 law that requires small businesses to disclose information on their owners.
Sen. Tommy Tuberville (R-AL) and Rep. Warren Davidson (R-OH) are planning to introduce the legislation in their respective chambers. FEDA joined several other business groups and trade associations in sending a letter to the congressmen supporting their efforts to repeal the bill.
The CTA has been criticized for being overly broad in its efforts to unearth financial crimes, particularly its definition of a shell company as any legal entity with 20 or fewer employees or $5 million or less in revenues — effectively encompassing every small business in the United States. The bill requires those businesses to report beneficial owners’ information to the Department of Treasury’s Financial Crimes Enforcement Network, creating an additional burden on an estimated 32.6 million businesses.
“Multiply 32 million by the number of beneficial owners per entity, and it becomes apparent that the CTA reporting regime is likely the biggest data collection regime in the history of the federal government outside of the tax code,” the letter states.
The status of the CTA is already in flux after a federal district court in Alabama ruled it unconstitutional in March, finding that it “transcends the limits imposed by the Constitution on the legislative branch.” Still, a repeal of the law would fully settle the issue.
“Your legislation would put an end to this remarkable overreach by repealing the CTA in its entirety. It would end this unnecessary reporting regime before it gets started and it would give Congress the opportunity to craft a better approach that balances our national security needs with the interests and rights of law-abiding small business owners,” the letter adds.
The full letter is available here.