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Laura Clark: Corporate Transparency Act could mean jail time for small business owners – Yellowhammer News

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Laura Clark: Corporate Transparency Act could mean jail time for small business owners – Yellowhammer News

The Corporate Transparency Act (CTA) places a new compliance on main street Americans with an LLC. What happens if you inadvertently fail to comply with this new Act? You could end up behind bars. 

The CTA requires individuals with “substantial control” over a company or equity position of 25 percent or greater to disclose personal data with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) – a government bureau most Americans have never even heard of before. 

For as far back as I can recall, millions of law abiding citizens have used LLC’s to invest in real estate or to simply protect their assets. In fact, over 32 million business entities are estimated to be affected by this law. Instead of concentrating on the success of their businesses, owners are having to navigate unnecessary complex regulations. 

What a grave example of government overreach.

Let’s look at the guidelines: Americans with a CTA filing obligation must report their name, date of birth, address, and a scan of their government-issued photo ID to the Treasury Department. Any time this information changes over the course of the thirty days, it must be submitted to FinCEN’s database. 

Failure to file with FinCEN could lead to a criminal penalty of up to two years of jail time and civil fines up to $10,000 per violation. 

Okay, so let me get this straight. You can come across the border illegally, get money, plane tickets, cell phones, just to name a few perks for the millions of illegal immigrants in this country, but if you dare not disclose personal information including a government issued ID, you as the controlling member of an LLC could be fined or even serve time in jail. So much for the American Dream!

What is the reasoning behind the Federal Government demanding this information? The goal of the CTA was to crack down on shell companies used to commit crimes. Do they really believe that the ones breaking the laws are going to comply with this new law and file with FinCEN? Of course not. The law will simply place a huge administrative burden on millions of hard working American business owners. Per usual, instead of going after the few that are breaking the law, the business owners who are doing their best to thrive are punished. 

Who started this? 

The legislation was championed by Oregon Senator Ron Wyden and former Representative Carolyn Maloney of New York and slipped into the Fiscal Year 2021 National Defence Authorization Act. After a veto by then President Trump and a subsequent congressional override vote, the bill became law on January 1, 2021, and it went into effect this year. 

Since it slipped through the cracks in DC, few in Washington and most outside the DC beltway have no idea this law even exists. They certainly don’t know the heavy criminal penalties associated with noncompliance. 

What does this mean for small businesses? It means the little guy has to struggle with all the red tape. LLC’s with more than 20 employees and greater than $5 million in revenue do not have to file with FinCEN. So where do they turn? 

The small percentage of small business owners who are aware of the CTA’s existence are looking for compliance guidance but have few places to turn. Accounting and law firms do not want to take on the exposure of filing for clients, and many small business owners are unaware of the repercussions associated with failure to file. 

This leaves the door open for abuse by the IRS and prosecutors who are either politically motivated or simply have an axe to grind. The last thing we need is for the CTA to place bad actors in our justice system. 

To add insult to injury, FinCEN has done little to nothing to educate Americans on the CTA and the harsh consequences of noncompliance. 

U.S. Senator Tommy Tuberville is introducing the Big Brother Overreach Act to overturn the CTA in its entirety. His bill would provide millions of small businesses and entrepreneurial Americans with regulatory and compliance relief and remove a weapon for political prosecution from corrupt prosecutors and the IRS. 

If Congress fails to act on this legislation, millions of American small business owners could be in for a rude awakening next year. 

Laura Johnston Clark is a wife, mother, and businesswoman. She grew up in the Wiregrass and now lives in Birmingham with her husband, retired Air Force Col. David Etheredge. She is a member of the Alabama Republican Party.

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