Amid concerns about the potential appointment of yet another inadequate secretary of labor, freelancers and small businesses find themselves up against an additional burdensome law from a greedy Congress and the Department of the Treasury. The Corporate Transparency Act (CTA) was made official by then-President Trump on January 1, 2021, discreetly included in the National Defense Authorization Act (NDAA) to mask its negative implications. This legislation mandates that any business entity registered with their state secretaries (such as LLCs, S corps, and C corps) must submit a report on beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
The CTA includes significant reforms to anti-money laundering laws and is intended to help prevent and combat money laundering, terrorist financing, corruption, and tax fraud. The CTA establishes a beneficial ownership reporting requirement for corporations, limited liability companies, and other similar entities formed or registered to do business in the United States.
This supposed “anti-money laundering and terrorist financing” law has the unintended consequences of disproportionately targeting single-entity owners (like independent professionals) and small business owners who hire less than 100 employees, opening us up to fraud, onerous penalties, and invading our right to privacy. In fact, the majority of us were not even aware of the law or that we would be subject to penalties if we do not file with FinCEN by January 1, 2025.
Merry Christmas and Happy Hannukah!
Financial expert, entrepreneur, and author Carol Roth testified before Congress in April and warned:
The Constitution of the United States protects the natural rights of all Americans, including against federal government overreach. While preventing financial crimes is a worthwhile endeavor, your methods cannot do so in a way that infringes upon Americans’ natural rights or assumes that they are guilty without due process.
It is not only an invasion of privacy, but it also creates additional burdens and challenges for small business owners. And, once again, by exempting big businesses from this reporting rule, it specifically and unfairly targets and penalizes small business owners with a different standard and set of rules.
Small businesses overall are not shell companies – they are the backbone of the economy.
If FinCEN has concerns about money laundering, cartel activity or otherwise, they should be using the courts to receive information on those specific cases and entities.
But as in the case with the Biden-Harris final Independent contractor rule, Congress’ push to institute the PRO Act by any means necessary, and much of the regulatory overreach coming from the National Labor Relations Board, our government treats small business less like the backbone of the economy, and more like the gum underneath their shoe.
Thanks to Roth’s advocacy and a lawsuit brought by the National Federation of Independent Business (NFIB) to block the enforcement of this law through Texas Top Cop Shop, Inc., et al. v. Garland, et al., the U.S. District Court for the Eastern District of Texas granted a preliminary injunction in early December which blocked the CTA BOI reporting requirements from going into effect.
But an adversarial government never sleeps. Note the dateline, two days before Christmas: These are really some evil sons of biscuits.
While the deadline for filing was extended to January 13, 2025, this still places independent professionals and small businesses back at square one, with a sword of Damocles hanging over our heads during this holiday season. Where’s the goodwill toward men?
“Because of this decision, small business owners must scramble to meet the reporting requirements of this egregious statute. Enforcing a Jan. 1 deadline for compliance will mean massive chaos for our nation’s small businesses,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “The district court, in granting the preliminary injunction, rightly recognized that the BOI reporting requirements would have devastating consequences for small business owners. Make no mistake, NFIB is already working to quickly appeal this terrible decision and provide our Main Streets with a reprieve from this harmful mandate.”
NFIB and other organizations continue to work to block the enforcement of this law. The Center for Individual Rights has the injunction be restored and the appeals court rules by January 6, ahead of the new FinCEN deadline. Whether through this and other court decisions or the “Repealing Big Brother Overreach Act,” which will be before the 119th Congress, this law needs to be rescinded.
Also, our friends @SCorpAssn noted the ruling in the @NSBAAdvocate case could come soon (appeal arguments happened in September) and there’s another case in Michigan may rule soon.
Please stay vigilant on the CTA BOI.
Also please keep asking the Trump admin to make a statment…
— Carol Roth (@caroljsroth) December 24, 2024
Also, our friends @SCorpAssn noted the ruling in the @NSBAAdvocate case could come soon (appeal arguments happened in September) and there’s another case in Michigan may rule soon.
Please stay vigilant on the CTA BOI.
Also please keep asking the Trump admin to make a statment of non-enforcement of penalties (and even better, getting rid of it entirely).
NFIB sounds the alarm on the ripple effect this could cause. We need this lump of coal in our Christmas stockings to be gone.
More than 32 million small businesses throughout the country will once again be subjected to this burdensome statute, including the nearly 300,000 NFIB member businesses represented in this lawsuit. NFIB supports the Repealing Big Brother Overreach Act, legislation that would repeal the CTA and permanently relieve small businesses of the beneficial ownership requirements.
