State Director Chris Ferruso penned an op-ed on the troubling beneficial ownership requirements
The Cincinnati Enquirer published a guest column by NFIB Ohio State Director Chris Ferruso on the Corporate Transparency Act and the troubling beneficial ownership requirements. Read his column here:
New federal law requires a mandate that may devastate Ohio’s small businesses
There’s a new federal law on the books that could devastate Ohio’s small businesses.
It’s called the Corporate Transparency Act, and it requires over 30 million small businesses – including hundreds of thousands in the Buckeye State – to send the U.S. Treasury Department personal information about their “beneficial owners.” That’s practically everyone who controls or owns a piece of the business.
Main Street business owners who slip up and don’t fully comply with the mandate could be slapped with a $10,000 fine, plus a $591-a-day late fee, and be sentenced to two years in federal prison.
That’s a harsh sentence for a law most local businesses don’t know about. A recent survey by the National Federation of Independent Business found that 83% of owners didn’t know about the mandate. This means they’re at risk of being punished for inadvertently breaking a law they don’t know exists and that shouldn’t have passed in the first place.
Supporters of the legislation argued it was needed to help the government catch bad guys. They say criminals sometimes use small businesses to hide their identities and launder money. Supporters say requiring employers to file reports on the owners would make it easier to investigate companies suspected of wrongdoing.
One hole in that argument is that bad guys are unlikely to follow the rules and inform the federal government about the criminals who are laundering money through their businesses. I don’t think drug dealers or other evildoers already facing decades in prison are going to lose sleep over a little paperwork.
On the other hand, the ownership reporting mandate could be devastating for small, family-run businesses. Big corporations have teams of lawyers and compliance officers to keep up with the latest government mandates and make sure their employees follow the rules.
Small businesses usually don’t. When it comes to Main Street, the person in charge of compliance and sending in the paperwork is often the owner, who also stocks the shelves, works the cash register, and empties the trash.
The Corporate Transparency Act is a good example of everything that’s wrong with Washington. It was tucked inside another bill that passed with little fanfare in 2021. And unlike most regulations, it’s aimed squarely at small businesses. Businesses with more than 20 employees are exempt, meaning no medium-size businesses or chain stores have to comply.
Earlier this month, a group of NFIB small business members from throughout the state flew to Washington, where they urged senators and representatives to take immediate action to stop this onerous mandate before it causes real damage.
The law has also caught the attention of U.S. Rep. Warren Davidson of Ohio’s 8th District. This spring, he joined 11 other House members in sponsoring the Repealing Big Brother Overreach Act, legislation that would strike this patently unfair mandate from the books.
Small business owners already face too many mandates. Now they have to fill out yet another form, track down photocopies of every owner’s ID documents, and figure out how to get everything into the government’s hands. Plus, they have to redo the whole process every time ownership changes, even a little. That’s a regular occurrence for many family-owned small businesses.
Just as concerning is the potential for a massive breach of privacy. The Corporate Transparency Act gives the government broad access to people’s personal information. It could be used by federal, state, local, or tribal law enforcement agencies for just about any reason. In many cases, officials wouldn’t even need a subpoena. What’s more, this centralized database would be a target for every hacker on earth.
There’s nothing beneficial about this “beneficial ownership” regulation. If Congress wants to help Ohio’s small businesses during these difficult economic times, it will repeal this onerous law before anyone gets hurt.
