A newly proposed bill could but threaten small business owners with jail time.
In an effort to crack down on criminals exploiting small businesses for the use of money laundering and tax evasion purposes, Rep. Carolyn Maloney (D-NY) introduced The Corporate Transparency Act of 2019. But the bill is already getting push back from The National Federation of Independent Businesses.
The bill requires an entity that forms a corporation or limited liability company to disclose information about its beneficial owners. But NFIB warns the paperwork required of small businesses if the bill passes could bury owners.
Failure to comply with the bill if it passes could result in a civil penalty and criminal penalties—a fine, a prison term for up to three years, or both.
"The end result is it's going to require every business owner with fewer than 20 employees to file yearly paperwork. If they don't file that paperwork, they're going to be assessed with fines up to $10,000 dollars and even up to three years in jail," warns Brad Close, Senior Vice President for Public Policy at NFIB.
Which threatens resource-strapped small businesses further.
Close says, "We are very concerned about this. It's going to have a huge financial burden on small businesses, we estimate about $600 million a year, $5.7 billion over ten years in lost productivity for small business owners."
"Small business owners cannot afford the teams of lawyers, accountants, and compliance experts that large businesses and financial institutions can afford," NFIB said in a statement. "This means that gathering personally identifiable small business ownership information and handling compliance issues and reporting requirements falls on the small business owner. For small business owners, time spent periodically gathering and reporting information is valuable time they could be spending on operating and growing their businesses."
The bill was introduced this year in May and has passed out of committee.
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