by NATHAN HUMPHREY

On the surface, the proposed Corporate Transparency Act of 2019 sounds inoffensive.

It would require most businesses with fewer than 20 employees to file paperwork with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) so the government can keep track of everyone with an ownership stake in the small business. Supporters say it would help catch bad guys trying to get away with money laundering or cheating on their income taxes.

The problem is that the Corporate Transparency Act overreaches. It will create additional costs and extra work for Georgia’s small businesses and violate people’s privacy.
It’s one thing for Washington to impose additional mandates on big corporations. Those businesses have teams of lawyers and compliance officers to keep up with new rules and help owners stay on the right side of the law.

Small businesses don’t. At a small business, there’s the owner, and, many times, that’s it. The person who fills out forms and files the paperwork is the same person who works the cash register, sweeps up, and signs the checks. 

And make no mistake: Federal paperwork is a big problem for Georgia’s small businesses. According to the latest NFIB Small Business Problems and Priorities survey, federal paperwork ranks 12th out of 75 potential problems facing Main Street. If the Corporate Transparency Act becomes law, it would make federal paperwork an even greater distraction for entrepreneurs and divert time and resources the owners should spend on running and growing their businesses.

According to the bill, owners would have to report the names, dates of birth, address and current drivers’ license or passport numbers of everyone with at least a 25 percent stake in the company and who “receives substantial economic benefits from the assets” of a small business. It would be up to regulators at the Treasury Department to come up with a good definition for “substantial economic benefits.”

There’s also the potential for a massive breach of privacy. If the bill becomes law, it would give the government broad access to owners’ personal information – information that could be used by federal, state, and local law enforcement for just about any reason and without a subpoena or warrant. 

All that personal information would probably make a tempting target for hackers, too. 

The bottom line is that the Corporate Transparency Act is bad legislation that would impose mandatory reporting requirements on the businesses least equipped to handle them. It would shift the reporting requirements from big banks to millions of small businesses. It would be death by a thousand paper cuts.

That’s why NFIB is asking Georgia’s congressional delegation to vote against it. We need legislation that clears a path to help small businesses grow and create jobs rather than throw obstacles in their way.

Nathan Humphrey is Georgia state director of NFIB, the nation’s leading small business advocacy organization. He lives in Atlanta.