Small business owners across the U.S. are now subject to a 2020 law known as the Corporate Transparency Act that requires corporations and limited liability companies (LLCs) with 20 or fewer full-time employees to file new Beneficial Ownership Information (BOI) reports with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) bureau. The reports contain business owners’ personally identifiable information, and the law expands FinCEN’s regulatory authority to 30 million small businesses.
A beneficial owner is defined as anyone with 25% or more of a reporting business’s ownership interests or individuals with substantial control over a reporting business.
Small business owners have long raised concerns about this law’s federal reporting requirements and associated privacy concerns. When NFIB surveyed its membership on this issue, 80% of small business owners opposed Congress requiring small business owners to file paperwork with the Treasury Department each time they form or change ownership of their businesses..
On July 19, 2023, NFIB testified before the U.S. House of Representatives Committee on Financial Services Subcommittee on National Security, Illicit Finance, and International Financial Institutions in a hearing titled, “Potential Consequences of FinCEN’s Beneficial Ownership Rulemaking.” The hearing addressed the beneficial ownership information requirements for small businesses. Read NFIB’s press release here.
On September 18, 2023, NFIB sent a letter to the House Financial Services Committee expressing disappointment that the committee did not consider stronger legislation to delay or repeal the beneficial ownership information regulation. Instead, FinCEN released a 56-page compliance guide that demonstrates this is no longer a simple request for information. NFIB continues to urge Congress to repeal the law to avoid further burdens on small business owners.
NFIB has created a fact sheet for small business owners to use as a reference tool now that this rule is in effect. The NFIB Small Business Legal Center hosted a webinar titled, “Beneficial Ownership Reporting Is Here: What Small Business Owners Need to Know About the New Reporting Requirements.” Watch the webinar on-demand to get expert guidance.
Take Action: If your small business falls under the new BOI reporting law, urge Congress to repeal the new law today!
The Financial Crimes Enforcement Network Improvements Act
In a letter to the Treasury Department, NFIB recommended nine adjustments to protect small businesses from overreaching regulations proposed, some of which are being addressed in H.R. 7623, the Financial Crimes Enforcement Network Improvements Act. NFIB supports this legislation, which would:
- Provide for the appointment of the Director of FinCEN by the President of the United States, by and with the advice and consent of the Senate.
- Establish a special Deputy Inspector General for FinCEN with a substantial priority to help make sure that FinCEN protects the civil liberties and privacy of Americans.
- Establish a Civil Liberties Protection Officer for FinCEN in Treasury’s front office.
- Require transparency in rulemaking from FinCEN.
- Require FinCEN to provide Congress and the public with documents similar to the Freedom of Information Act.
- Require the Director of FinCEN to regularly testify before Congress as well as promptly report to Congress on any unlawful activity by FinCEN employees.
