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More About the Corporate Transparency Act

By Eric Elgin

May 17, 2024

AICC, through its membership in the Small Business Legislative Council, monitors legislative developments in Washington, D.C., and from time to time, there’s something to report to you, our members.

First on the list is a move in the U.S. House of Representatives and U.S. Senate to delay the implementation of the Corporate Transparency Act (CTA). I wrote about the CTA in September (Legislative Report, BoxScore, September/October 2023). In that article, I wrote, quoting the American Bar Association, that “at its core, the CTA is a mechanism to deal with issues related to ‘dirty money’—i.e., guarding against money laundering, terrorism financing, and other forms of illegal financing—as well as the general lack of beneficial owner (i.e., ‘true owner’) information with respect to many domestic entity structures … The CTA was born of the view that the availability of beneficial ownership information is a crucial tool in the fight against tax evasion, money laundering, corruption, terrorist financing, and other financial crimes.”

I dare say that if anyone in our industry were to be found guilty of violating the law, it’s highly unlikely the crimes listed here would be among them. The law was slated to go into effect on January 1, 2024, but the U.S. Court of Appeals for the Northern District of Alabama on March 5, 2024, ruled in a lawsuit brought by the National Small Business Association (NSBA; National Small Business Association v. Yellen) that the CTA exceeded the U.S. Constitution’s enumerated powers and was, therefore, unconstitutional. Yet the ruling’s application was strangely limited, giving relief only to the members of the principal plaintiff, the NSBA. All other businesses would still be subject to the law’s deadlines.

On March 19, 2024, AICC joined 125 other business and industry associations in appealing to the House and Senate to delay the effective date of the law to allow the NSBA suit to make its way through the judicial process and to be consistent with the original congressional intent on giving businesses a full two years to learn about and comply with its reporting requirements. And what are those requirements? Businesses will have to report their beneficial ownership annually to the Financial Crimes Enforcement Network. “Beneficial ownership” means anyone who has a financial interest in the business, which in the eyes of many critics is an invasion of privacy and a precursor to greater reporting demands on the business community going forward.

We hope sound reason will prevail in this discussion and the voices of 125 business and industry associations are heeded. The two pieces of legislation that would extend this bill’s deadlines are S. 3625 and H.R. 5119. Urge your representatives and senators now to support them. Go to www.house.gov or www.senate.gov to find your congressional representatives. Or call the U.S. Capitol switchboard at 202-224-3121. 


Eric Elgin is owner of Oklahoma Interpak and chairman of AICC’s Government Affairs subcommittee. He can be reached at 918-687-1681 or eric@okinterpak.com.

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