Bill in Congress carries unintended consequences for state small businesses
A bill in Congress meant to help police unearth global criminals who form shell companies in the United States for illicit activities sounds laudable on the surface. But it would create great hardship for hundreds of thousands of law-abiding small business owners across the country, with little proof it would produce much in terms of results. The legislation, which requires businesses with fewer than 20 employees to comply with extensive reporting requirements or face significant fines or jail time, is a massive overreach by government, and it would impact one million such small businesses in Pennsylvania.
The Corporate Transparency Act requires these small business owners to turn over significant personal information to the government and make it accessible to local or federal police, and upon request to foreign governments. The more that private information is shared, especially globally, the larger the privacy concerns become, including identity theft, hacking, and fraud for the small business owner.
It also burdens small business owners with extensive, time-consuming, and recurring reporting requirements tied to the threat of $10,000 fines and three years in jail for non-compliance. In short, the CTA is a criminal fishing expedition by the government without probable cause and a massive vacuuming of data from law-abiding small business owners. Our American criminal justice has traditionally required the hint of a crime and a focus on a specific target, not one where private documents are demanded by the government of so many, willy-nilly.
Small business owners, especially those with fewer than 20 employees, are the least able to deal with such paperwork when they often work long days to get their job done. They don’t have compliance people, accountants, or lawyers on staff to assist and advise. Having these entrepreneurs report detailed information about themselves and “beneficial owners”, which is a complex definition, and then require more paperwork within two months should anything change, is a huge burden. It would prevent them from spending time growing their business or creating new jobs. According to NFIB’s research, filling out federal paperwork already falls among the top 20 percent of small business owner’s concerns.
While stopping international and internal terrorism, financial crimes, and hiding money for those purposes is a legitimate concern, the Corporate Transparency Act goes way too far. Members of Pennsylvania’s Congressional delegation should vote against it.
Gordon Denlinger is the state director of NFIB, a small business advocacy association with 12,500 members in Pennsylvania.