Sometimes, Congress comes up with a bill that would be bad news for Alabama’s small businesses. This time, though, it’s come up with three competing bills, each even worse than the other.
In the House, we have the Corporate Transparency Act of 2019. In the Senate, there’s the ILLICIT CASH Act and the TITLE Act.
Whatever it’s called, it’s overreaching legislation that would make it even harder and more expensive for people to operate a small business.
Supporters of the bills say they’re merely trying to crack down money launderers and other crooks trying to hide behind small businesses. However, the measures would impose costly and burdensome new mandates that would distract employers from running their businesses. They would pose a severe invasion of innocent people’s privacy.
The common thread running through all of the bills is a provision that would require owners to file periodic reports with the government. The reports would include personal information on everyone with an ownership stake in the business. The Corporate Transparency Act in the House and the ILLICIT CASH Act in the Senate define that as owning at least a 25 percent stake in the business or receiving “substantial economic benefits” from its assets. The TITLE Act’s definition is even broader.
These filing requirements would hurt every business, regardless of size, but they would be especially destructive to small businesses.
Big corporations have teams of lawyers and compliance officers to keep up with the latest government mandates and ensure their employers are following the rules, but small businesses don’t.
The vast majority of NFIB’s small business members in Alabama has fewer than 10 employees. Over half fewer than five.
At a small business, the person in charge of compliance, of keeping track of the government’s latest mandates and filling out the paperwork is usually the same person who turns the lights on in the morning, locks up at night, and signs the checks – the owner. And if the owner makes a mistake and doesn’t comply, she could be fined or even sent to prison.
Under the House bill, owners who fail to provide the information could be sentenced to three years in prison and fined $10,000. Under the ILLICIT CASH Act, it’s four years and a $10,000 fine. Under the TITLE Act, it would be three years and a $1 million fine.
Paperwork is already a problem for Alabama’s small businesses.
According to the latest NFIB Small Business Problems and Priorities survey, federal paperwork ranks 12th out of 75 potential problems facing small businesses. If any of these bills become law, they would make federal paperwork an even greater distraction for entrepreneurs. It would divert even more time and resources from running and growing the business.
Just as troubling is the potential for a massive breach of people’s privacy.
These bills require the government to keep the beneficial ownership information for the life of the business plus five years. They also grant broad access to federal, state, local, or tribal government agencies through a simple request without the need for a subpoena or warrant. That’s bad enough, but there’s also the possibility that the information could be leaked or hacked.
Our members understand the need to stop criminals from exploiting small businesses for illegal gain. However, this legislation places an unfair burden on law-abiding entrepreneurs and makes it even harder for them to grow their businesses and create new jobs.
That’s why NFIB is urging Alabama’s congressional delegation to reject the Corporate Transparency Act, the TITLE Act, and the ILLICIT CASH Act.
Rosemary Elebash is NFIB’s state director for Alabama. She lives in Montgomery.