May 5, 2024
The American Rental Association, along with 97 other signatories representing millions of small businesses, has signed a letter in support of a proposed bill that seeks to repeal the federal Corporate Transparency Act (CTA).
The CTA was enacted in 2021 to curb illicit finance and mandates Beneficial Ownership Information (BOI) reporting — the requirement of many companies doing business in the U.S. to report information about the individuals who ultimately own or control them.
The CTA’s BOI reporting requirement for businesses began on Jan. 1, 2024, and is administered through the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The proposed Repealing Big Brother Overreach Act, introduced in Congress by Sen. Tommy Tuberville (R-Ala.) and Rep. Warren Davidson (R-Ohio), would repeal the CTA — including the BOI reporting requirement — in its entirety. Its proponents say the legislation, if enacted, would pave the way for a new approach that would better balance national security needs with the interests and rights of law-abiding small business owners.
Those supporting the Repealing Big Brother Overreach Act stressed the following as poor constructs of the existing CTA and evidence of the need to repeal/replace:
- The CTA was designed to help law enforcement prevent money laundering by requiring shell companies to report BOI to the Department of the Treasury. The law, however, defines a shell company as any legal entity with 20 or fewer employees or $5 million or less in revenues — criteria that defines most small business in the U.S.
- The CTA’s definition of “beneficial owner” is overly broad and can include owners, senior management, members of the board and any employee or outside consultant exerting significant control over the businesses’ operations.
- Covered entities must report and regularly update the personal information of their “beneficial owners” to FinCEN or face significant fines and jail time.
- With FinCEN’s expectation to collection more than 32 million submissions during 2024 (and an additional 5 million submissions annually thereafter) multiplied by the number of beneficial owners per entity, the CTA is on track to become the biggest data collection mechanism in the history of the federal government outside of the tax code.
- The CTA will be of little practical use to law enforcement as criminals are unlikely to accurately self-report their information to FinCEN. Meanwhile, because the CTA targets entities with low revenues and few employees, the brunt of its reporting burden and excessive penalties will be shouldered by law-abiding small businesses.
To view the full letter supporting the Repealing Big Brother Overreach Act, including the names of the signatory trade organizations, click here.
