Coalition Letter to Congress to Delay the Corporate Transparency Act's Filing Deadline

July 25, 2024

The Honorable Sherrod Brown
Chairman, Committee on Banking
United States Senate
Washington, D.C. 20510

The Honorable Tim Scott
Ranking Member, Committee on Banking
United States Senate
Washington, D.C. 20510

Dear Chairman Brown and Ranking Member Scott:

The undersigned organizations, representing millions of small businesses, strongly support amending the FY2025 National Defense Authorization Act to delay by one year the Corporate Transparency Act's (CTA) filing deadline.

Amendments sponsored by Senators Tim Scott (#2169) and James Lankford (#2831) would provide the business community and federal regulators additional time to educate millions of small business owners regarding the CTA's new reporting requirements and the onerous penalties resulting if they fail to comply. They would also allow time for the on-going legal challenge to work its way through the courts while restoring Congress's original intent to give covered entities a full two years to comply with the statute's reporting requirements.

Although filing under the CTA began at the start of this year, only a few million businesses have registered while an estimated 28 million covered small businesses have yet to file. This compliance rate of less than 10 percent is a direct result of the general lack of awareness among business owners regarding the new rules. While the business community and FinCEN have gone to great lengths to educate small business owners, it is clear additional time is needed. Absent a delay, millions of law-abiding citizens will be at risk of steep fines and criminal penalties come the end of this year.

Recent court decisions have added to the confusion. In March, the United States District Court for the Northern District of Alabama found the CTA exceeded the Constitution's enumerated powers and is therefore unconstitutional. That case was appealed and will be heard by an appellate court later this year. In the meantime, however, FinCEN continues to enforce the CTA against all small businesses and other entities not named in the lawsuit. This decision effectively creates two classes of small businesses - those NSBA members who are exempt and everybody else who must still comply.

Finally, in enacting the CTA lawmakers explicitly called for a reporting deadline of "not later than 2 years after the effective date of the regulations" for existing entities. This timeframe was designed to give affected entities sufficient time to learn of, understand and comply with the new reporting regime, while minimizing the burdens on reporting companies.

In its rulemaking, however, FinCEN shortened this deadline and gave existing entities just one year to comply. That decision is problematic both in its disregard of congressional intent and its practical implications for compliance rates. The CTA covers tens of millions of legal entities plus all those millions of individuals considered to be "beneficial owners," yet the vast majority of the law's targets remain wholly unfamiliar with their new compliance obligations. They simply need time to learn about the new law.

The one-year delay proposed by Senators Scott and Lankford in their respective amendments would address these challenges and they are consistent with legislation (H.R. 5119) which passed the House on a bipartisan 420-1 vote just last year.

The undersigned organizations therefore strongly urge you to support inclusion of these amendments as part of the FY2025 National Defense Authorization Act.

Cc: The Honorable Jack Reed, Chairman, Senate Committee on Armed Services
The Honorable Roger Wicker, Ranking Member, Senate Committee on Armed Services

Sincerely,

Agricultural Retailers Association

AICC, The Independent Packaging Association

Air Conditioning Contractors of America

American Building Materials Alliance

American Council of Engineering Companies

American Council of Independent Laboratories

American Dental Association

American Farm Bureau Federation

American Financial Services Association

American Foundry Society

American Hotel & Lodging Association

American Lighting Association

American Pipeline Contractors Association

American Rental Association

American Subcontractors Association

American Supply Association

American Veterinary Medical Association

AmericanHort

America's SBDC

Associated Builders and Contractors

Associated Equipment Distributors

Associated General Contractors of America

Brick Industry Association

Ceramic Tile Distributors Association

Colorado Cattlemen's Association

Community Associations Institute

Construction Industry Round Table

Design-Build Institute of America

Education Market Association

Energy Marketers of America

Family Business Coalition

FCA International

Finseca

Foodservice Equipment Distributors Association

Forest Resources Association

GAWDA

Global Cold Chain Alliance

Hardwood Federation

Hearth, Patio & Barbecue Association

Heating, Air-conditioning, & Refrigeration Distributors International

ICSC

Independent Bakers Association

Independent Electrical Contractors

Industrial Fasteners Institute

International Franchise Association

International Housewares Association

International Sign Association

Irrigation Association

ISSA, The Worldwide Cleaning Industry Association

Leading Builders of America

Main Street Employers Coalition

Manufactured Housing Institute

Manufacturer & Business Association

Marine Retailers Association of the Americas

Metals Service Center Institute

Michigan Farm Bureau

Nareit

National Apartment Association

National Association of Convenience Stores

National Association of Electrical Distributors

National Association of Home Builders

National Association of Sporting Goods Wholesalers

National Association of Wholesaler-Distributors

National Automatic Merchandising Association

National Cattlemen's Beef Association

National Community Pharmacists Association

National Cotton Council

National Council of Agricultural Employers

National Electrical Contractors Association (NECA)

National Electrical Manufacturers Representatives Association (NEMRA)

National Fastener Distributors Association

National Funeral Directors Association

National Grange

National Lumber & Building Material Dealers Association

National Marine Distributors Association

National Multifamily Housing Council

National Onion Association

National Propane Gas Association

National Ready Mixed Concrete Association

National Restaurant Association

National Roofing Contractors Association

National RV Dealers Association (RVDA)

National Small Business Association

National Tooling and Machining Association

National Utility Contractors Association

National Wooden Pallet & Container Association

New Mexico Farm & Livestock Bureau

North American Association of Food Equipment Manufacturers (NAFEM)

North American Equipment Dealers Association

NYS Agribusiness Association

Ohio Farm Bureau Federation

Oregon Cattlemen's Association

Outdoor Power Equipment and Engine Service Association

Pennsylvania Farm Bureau

Performance Racing Industry (PRI)

Plumbing-Heating-Cooling Contractors--National Association

Power & Communication Contractors Association

Precision Machined Products Association

Precision Metalforming Association

PRINTING United Alliance

Private Investor Coalition

Professional Beauty Association

Refrigerated Foods Association

Retail Bakers of America

Rocky Mountain Agribusiness Association

S Corporation Association

Service Station Dealers of America and Allied Trades

Small Business & Entrepreneurship Council

Small Business Legislative Council (SBLC)

Society of Collision Repair Specialists (SCRS)

South Dakota Trust Association

Southeastern Lumber Manufacturers Association

Specialty Equipment Market Association (SEMA)

Subchapter S Bank Association

Texas Farm Bureau

Textile Care Allied Trades Association

The Association for Hose and Accessories Distribution

The Fertilizer Institute

The Ohio Council of Retail Merchants

The Real Estate Roundtable

The Transportation Alliance

The Wholesale Florist and Florist Supplier Association

Tile Roofing Industry Alliance

Tire Industry Association

Truck Renting and Leasing Association

U.S. Chamber of Commerce

US Rice Producers Association

USA Rice

Virginia Cattlemen's Association

Virginia Farm Bureau

WASDA - Water and Sewer Distributors of America

Wholesale Florist & Floral Supplier Association

Wood Industry Association

Workplace Solutions Association

Wyoming Farm Bureau Federation

Wyoming Stock Growers Association

Public link

Please use the above public link if you want to share this noodl on another website.