DES MOINES — U.S. Representative Zach Nunn (IA-03) today introduced a bipartisan bill to reduce excessive paperwork for small businesses. The Protect Small Business from Excessive Paperwork Act, which is co-led by U.S. Representatives Yadira Caraveo (CO-08), French Hill (AR-02), and Sharice Davids (KS-03), will make it easier for Main Street businesses to comply with federal law and reporting requirements.
“Iowa’s economy is driven by small businesses – more than half of Iowans are employed by Main Street,” said Rep. Nunn. “Bureaucrats in D.C. sit in their ivory towers, demanding businesses comply with onerous red tape, without considering the burden it puts on businesses. We must do everything we can to roll back unnecessary regulations and simplify requirements for job creators while still following the law.”
In 2020, Congress passed the Corporate Transparency Act to establish new beneficial ownership information (BOI) reporting requirements for businesses to root out nefarious shell companies operated by foreign adversaries. However, during implementation, the U.S. Department of Treasury Financial Crimes Enforcement Network (FinCEN) failed to notify small businesses of the new reporting requirements. According to a survey by the National Federation of Independent Businesses (NFIB), 80% of NFIB members had never heard of the new reporting requirements.
“Throughout the Front Range and Northern Colorado, there is widespread concern amongst our small business owners regarding the quickly approaching deadline to submit beneficial ownership reporting requirements for their businesses,” said Rep. Caraveo. “These requirements are critical to tackling money laundering, tax fraud, and financing of terrorism. However, the lack of accessible information and awareness on these requirements and the upcoming deadline is only causing unnecessary confusion for small business owners. I’m proud to introduce the Protect Small Business from Excessive Paperwork Act with Representative Nunn to provide small businesses with a year extension to complete these requirements. Our small businesses need our support and we must act now.”
Rep. Nunn hosted FinCEN Director Gacki in Des Moines on May 31, 2024 to host a small business roundtable to discuss the new BOI requirements. During the event, Director Gacki reported that only 2 million out of approximately 32.6 million small businesses had filed their reports.
“Small businesses across America need more time to learn about FinCEN’s costly and burdensome beneficial ownership reporting requirement as the Biden Administration has failed to educate and inform them,” said Rep. Hill. “The closer we get to the current deadline, the angrier small business owners across the country are going to be when they learn that they only have five short months left to comply with these new, intrusive reporting requirements. Extending the deadline another full year will give small businesses time to file while we fight in Congress to save small businesses from the severe penalties for non-compliance.”
Despite the lack of filings under the new requirements, FinCEN has refused to extend the deadline, leaving millions of small business owners at risk of a $591 daily fine and up to two years in jail. According to the National Small Business Association, the average small business owner will spend nearly $8,000 to comply with these new reporting requirements.
“Small businesses are the backbone of our economy, and we should create policies that support them, not penalize them,” said Rep. Davids. “This bipartisan bill would give these business owners the time they need to comply with new regulations, allowing them to focus on what they do best – driving innovation and growth in our communities. I’m glad to work across the aisle with Representative Nunn in this effort.”
“Because of the CTA, small businesses are facing a mountain of burdensome paperwork and confusing, staggered deadlines,” said President & CEO, Todd McCracken, National Small Business Association. “Many, if not most small companies have no idea they need to file, and legal and accounting resources are limited. Moreover, noncompliant businesses could face up to $500 per day in fines. However, we have some good news. Thanks to a bipartisan coalition including Reps. Nunn, Caraveo, Hill, and Davids, small businesses are looking at least a temporary reprieve. The Protect Small Businesses from Excessive Paperwork Act is a vital first step to getting some clarity for small businesses and making sure they’re not left on the hook for stiff fines and penalties.”
“The U.S. Chamber applauds Representatives Nunn and Caraveo for introducing the Protect Small Business from Excessive Paperwork Act,” said VP for Small Business Policy, Tom Sullivan, U.S. Chamber. “The last thing small business owners want on January 1 is to face fines and criminal penalties because of missing federal reporting requirements they know nothing about. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and the business community need more time to bring small businesses into compliance with the Corporate Transparency Act.”
The bipartisan Protect Small Business from Excessive Paperwork Act extends the filing deadline until December 31, 2025 for small businesses while the Treasury Department educates businesses on the new reporting requirements and ensures small businesses are not overburdened with unclear and unnecessarily complicated new regulations.
Text of the bill can be found here.
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