Corporate Transparency Act: Congress Members Request for Delay

The Financial Crimes Enforcement Network (FinCEN) has received a request from more than 40 members of Congress to postpone the Corporate Transparency Act (CTA) by one year. According to the act, companies must submit a corporate transparency report by January 1.

The request, led by Rep. Lisa McClain (R-MI), highlights concerns that many small businesses are unaware of the new requirements.

“Without a delay, millions of small business owners could face fines up to $250,000 and possible jail time for non-compliance,” the letter stated.

While the CTA aims to prevent shell companies from engaging in illegal activities, in the broader language, it would impact nearly all small U.S. businesses with under $5 million in revenue and fewer than 20 employees.

The letter further stated that the CTA has complex reporting rules that may put sensitive personal data at risk, primarily including critical business data such as the UBO’ names, addresses, birthdays, and ID numbers.

The Congress Members also highlighted that FinCEN expects over 32 million businesses to be impacted by the new requirements this year, with an additional 6 million affected each following year as new businesses will be formed. As per FinCEN’s report, only about 10% of required submissions for the Corporate Transparency Act (CTA) have been received so far. Regarding this, the letter further raised concern that this low compliance rate is due to a widespread lack of awareness among small businesses.

It further stated that more time would be required for regulators and other stakeholders to continue reaching out to impacted small firms in light of this enormous education gap.

The email from an S Corporation said lawmakers are urging a delay to give businesses more time to understand and comply with the new reporting rules. It also emphasized that they make themselves heard more by learning more about the new requirements.

For an in-depth insight into the Corporate Transparency Act, The U.S. Chamber of Commerce released an article for businesses. This is due to the looming deadline for filing the corporate transparency reports with UBO data. Different groups have made attempts to hinder the CTA ever since it was enacted in 2021.

Regarding the unconstitutional nature of the CTA, the Alabama U.S. District Court also made a decision. Even though it was designed to safeguard National Small Business Association (NSBA) members, 32 million additional small businesses nationwide still had to comply with filing requirements.

A number of other small businesses have also requested different bills that would delay the legislation; however, none of them have passed through Congress.

Suggested Read: 

Corporate Transparency Act: Navigating Exemptions, Office Requirements, and UBOs

FinCEN Issues New Guide on Corporate Transparency Act Compliance