This week PIA, along with a coalition of small business stakeholders, sent a letter to Congress in support of Rep. Patrick McHenry’s (R-NC) Protecting Small Business Information Act. This legislation would delay reporting requirements under the Corporate Transparency Act (CTA), which is set to go into effect on January 1, 2024, until there is a robust regulatory framework in place.

The CTA, which was passed in 2020 to fight against money laundering and terrorist financing, requires small businesses to submit regular reports to the federal government which can contain delicate personal information of owners and employees. The CTA is narrowly targeted towards small businesses, only applying to entities with under $5 million in annual revenues and fewer than 20 employees. With the Treasury Department estimating the CTA will cover 32 million existing entities, in addition to 5 million newly created entities each year, the CTA guarantees that small business owners with the fewest resources to afford the costs of compliance will be the ones exposed to burdensome paperwork and risk of potential fines and prison time.

Further, the Treasury Departments Financial Crimes Enforcement Network (FinCEN) has not established the necessary regulatory framework to administer reporting requirements under the CTA. The Access Rule, which determines who can access the data and for what purpose, has not yet been finalized, nor has an updated Customer Due Diligence Rule, which applies to financial institutions.

With key regulatory pieces missing, PIA strongly supports Rep. McHenry’s bill to delay reporting requirements under the CTA. A delay would also provide more time for Congress to potentially rethink subjecting small businesses to this onerous reporting requirement at all, something PIA continues to have concerns with.