More than 40 members of Congress sent a letter last week to the Financial Crimes Enforcement Network (FinCEN) requesting a one-year delay on the Corporate Transparency Act (CTA). 

Businesses have until Jan. 1 to file a corporate transparency report.

The letter, led by Congresswoman Lisa McClain (R-MI), says there are concerns that many businesses lack awareness about the act. 

” Without a delay in the effective date, millions of America’s smallest business owners will be deemed out of compliance and subject to penalties and fines up to $250,000 and even jail time,” the letter says. “While CTA intends to target shell corporations engaged in illicit transactions, its language actually targets all legal entities with less than $5 million in annual revenues and less than 20 employees – in other words, every small business in the United States.” 

The act has complex reporting requirements and puts sensitive personal information at risk, the letter says. This includes some businesses having to provide the beneficial owner’s names, addresses, birthdays, license or passport identification numbers, and jurisdiction of the documents, it says. 

“FinCEN estimates that more than 32 million such entities will be affected by the new law just this year, with an additional 6 million each subsequent year as new businesses are formed,” the letter says. 

It says FinCEN has received about 10 percent of the required submissions so far. 

“This compliance rate can be attributed directly to the general lack of awareness among the small business community when it comes to the new rules, the letter says. “Given this massive education gap, it is clear additional time is needed for regulators and other stakeholders to continue their outreach to affected small businesses.” 

An S Corporation Association email says it continues to discuss a needed delay to the act with legislators and staff. 

“The more small business owners learn about the new requirements, the louder their voices become in asking elected officials for help,” the email says. 

The U.S. Chamber of Commerce recently released an article explaining the Corporate Transparency Act (CTA) to businesses as the Jan. 1 deadline for filing a corporate transparency report with beneficial ownership information (BOI) looms. 

There have been multiple attempts to stall the CTA by different groups since it was enacted in 2021. 

In March, the Alabama U.S. District Court ruled that the CTA is unconstitutional. The decision protects members of the National Small Business Association (NSBA) who brought the suit. However, 32 million other small businesses in the nation are still required to meet the filing requirements. 

Hundreds of small businesses, including the Society of Collision Repair Specialists (SCRS), National Small Business Association, and S Corporation Association, asked for the passage of different bills, such as S3625 and its companion HR5119, that would have stalled legislation; however, none of the bills have made it through Congress.

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