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Banks (Finance)

Lawmakers Urge Treasury Department to Exempt U.S. Businesses from Corporate Transparency Act

Strategic Insights

— 1 min read

Reps. Warren Davidson and Jim Banks led 84 colleagues in sending a letter to the Treasury Department, FinCEN, National Economic Council, and President Donald Trump, urging them to exempt U.S. businesses from the Corporate Transparency Act's (CTA) Beneficial Ownership Information (BOI) reporting requirements. The lawmakers argue that the CTA, intended to fight money laundering, has imposed unnecessary red tape on law-abiding small businesses while allowing criminals to evade compliance.

Key Takeaways:

  • The Corporate Transparency Act requires small businesses with fewer than 20 employees and under $5 million in revenue to report "beneficial ownership" information to the Financial Crimes Enforcement Network (FinCEN), carrying penalties of up to $10,000 and 2 years in prison.
  • The law imposes tens of billions of dollars in compliance costs on 32.6 million law-abiding small businesses, while criminals, drug cartels, and foreign actors are unlikely to comply.
  • Sensitive data collected under the CTA can be accessed by state, federal, and international authorities without a subpoena or warrant, raising serious privacy and cybersecurity concerns.
  • President Trump previously denounced the CTA as "invasive, outrageous, and an economic menace," recognizing its threat to America's small businesses.
  • Rep. Warren Davidson introduced the Repealing Big Brother Overreach Act to repeal the CTA, citing its effect on small businesses as "one of the most burdensome small business regulations in history."
  • The lawmakers urge the Treasury Department and FinCEN to promulgate a final rule that exempts U.S. businesses from the CTA, citing the need to provide long-term relief from the law.

Statistics:

  • 32.6 million law-abiding small businesses are affected by the Corporate Transparency Act.
  • Up to $10,000 per violation is the penalty for non-compliance with the CTA.
  • 2 years in prison is the maximum sentence for violating the CTA.
  • Tens of billions of dollars in compliance costs are imposed on small businesses due to the CTA.
  • 20 employees is the employee threshold for small businesses affected by the CTA.
  • $5 million is the revenue threshold for small businesses affected by the CTA.

Sources:

  • "Letter to Secretary of the Treasury Scott Bessent, FinCEN Director Andrea Gacki, National Economic Council Director Kevin Hassett, and President Donald Trump" (No date or publication date specified)
  • "Repealing Big Brother Overreach Act" (Introduced by Rep. Warren Davidson in January, exact date not specified)

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