Guest opinion: Small businesses caught in the crosshairs of Corporate Transparency Act

This is no ordinary legislative proposal; this could be one of biggest regulatory burdens ever foisted on small-business owners — and it may come up for a vote in Congress soon in a completely unrelated bill.

Steep fines, jail time, multiple hours needed for compliance, the inappropriately named Corporate Transparency Act of 2019 not only would burden America’s smallest businesses with new and frequent paperwork requirement but also would threaten small business owners’ privacy.

The bill is not about corporations; it would only affect small businesses with 20 or fewer employees and requires yearly filing of personal information to be stored in yet another federal government database. Failure to provide completed and updated reports could result in civil penalties up to $10,000 and criminal penalties up to three years in prison. Thankfully, Idaho’s Congressmen Russ Fulcher and Mike Simpson rightly opposed the bill last October, but it still passed the U.S. House before getting stuck in the U.S. Senate.

Undeterred, the bill’s author slipped it into the House National Defense Authorization Act as an amendment, cleverly making a vote against the Transparency Act also a vote against a bipartisan defense bill.

Congress needs to separate the partisan small business paperwork requirement from the bipartisan defense bill. Its consequences for Idaho’s Main Street, mom-and-pop firms cannot be understated.

This amendment would saddle America’s smallest businesses with 131.7 million new paperwork hours at a cost of $5.7 billion and treats small-business owners as criminals by threatening them with jail time and oppressive fines for paperwork violations. The amendment also puts the personal information of small business owners at serious risk to hacks, leaks or abuse.

And for what?

Proponents hope the legislation will combat money laundering. NFIB is concerned the legislation will make unsuspecting business owners criminals while criminals will continue to evade compliance and enforcement. It will establish a new regulatory burden that is only likely to grow over time.

A muffler shop in Coeur d’Alene is unlikely to be aware of the annual paperwork burden buried in a defense bill. A beauty shop in Twin Falls may not be able to pay a compliance expert to ensure the annual report is completed and updated if any information changes.

The bottom line is that small-business owners simply cannot afford the additional compliance costs and security risks that the Corporate Transparency Act imposes. While we appreciate efforts to discourage wrongdoers from taking advantage of U.S. companies, Congress must not create undue burdens on those who can least afford them or put small business owners’ private information in jeopardy.

Idaho’s small businesses urgently need Sens. Mike Crapo and Jim Risch to work to exclude this amendment or similar requirements from the final defense bill.