FCA International, along with 125 organizations, sent a letter to the Senate Banking Committee Chairs urging them to delay the filing deadlines of the Corporate Transparency Act (CTA) by passing S. 3625, the Protect Small Business and Prevent Illicit Financial Activity Act, introduced by Sen. Tim Scott (R-SC). The companion to this legislation (H.R. 5119) was adopted by the House of Representatives on a bipartisan vote of 420-1 on Dec. 12, 2023.
A one-year delay of the CTI’s filing deadline would allow the court process to work its way through the Appellate and Supreme Courts. This process began with the recent decision in National Small Business Association v. Yellen. Such a delay would be consistent with congressional intent, which aims to give covered entities two years to comply with the CTA’s reporting requirements. Additionally, it would provide the business community and the Financial Crimes Enforcement Network (FinCEN) with additional time. This is crucial for educating millions of small business owners about the new reporting requirements and the severe penalties for non-compliance.
The CTA was developed and passed with the intention of curbing illicit financial activities. However, it has evolved into a complex regulatory challenge affecting America’s smallest businesses. It subjects covered entities and their “beneficial owners” to vague and complex reporting requirements, while putting their sensitive information at risk. Failure to comply with the new statute, even in cases amounting to nothing more than a paperwork violation, can result in stiff fines and criminal penalties.
