Small businesses in the crosshairs

 American Action News:

Unless Congress acts quickly, America’s small business owners, preparing for Christmas, may soon be visited by the compliance Grinch carrying fines and possible jail time down the chimney.

New beneficial ownership information reporting requirements under the Corporate Transparency Act (CTA) are set to ensnare millions of business owners across the country unknowingly. While the legislation’s stated purpose was to combat money laundering, terrorism financing and other illicit activities, the burdens it places on small businesses — particularly during the holiday season — strongly outweighs its intended benefits.

As Christmas approaches, policymakers should consider granting relief to small businesses by delaying the reporting requirements. Here is why the CTA poses significant challenges and why a reprieve is urgently needed.

First, the CTA requires small businesses to disclose detailed information about their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN). This includes anyone who owns or controls at least 25% of the business or exercises substantial control over it. For small businesses, already under strain during the busiest time of the year, the timing could not be worse. Entrepreneurs juggling inventory, staffing and holiday sales must now also contend with a maze of new administrative requirements.

The penalties for noncompliance under the CTA are severe: fines of up to $10,000 and imprisonment for up to two years. For small business owners scrambling to meet holiday demands, the risk of unintentional error is high. Compounding the problem, only 10 million of the 36 million covered entities had filed as of the beginning of December, suggesting that over 20 million small businesses will be out of compliance at the end of the year.

That’s right, millions of small businesses are currently in the line of fire, the majority of which likely have no idea about the requirements or consequences of noncompliance.
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Congress must have caused this problem by passing the legislation, to begin with.  There must be a better way to deal with money laundering than imposing this burden on people who are not in the money laundering business.  Most small businesses are just trying to make an honest living.

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