It's yet another battle featuring U.S. Sen. Tommy Tuberville (R-Auburn) fighting an "overreach" by the federal government.
Tuberville is introducing the "Repealing Big Brother Overreach Act" to overturn a new federal rule that could bring criminal penalties to millions of business folks.
Alabama's senior U.S. Senator cited The Corporate Transparency Act (CTA) as "a classic example of intrusive big-government overreach.
"It places a new compliance burden on main street Americans with an LLC, and failure to comply comes with criminal penalties that could land you behind bars," he added.
The CTA requires individuals with "substantial control" over a company or 25% stock ownership to disclose personal data to the Treasury Department's Financial Crimes Enforcement Network (FinCEN) – "a government bureau most Americans have never heard of."
"The CTA will impact small businesses across the nation in addition to millions of citizens who use LLCs to invest in real estate or to protect their assets. Over 32 million business entities are estimated to be affected by the law," Tuberville wrote in an op-ed piece in Newsweek Magazine.
Americans with a CTA filing obligation must report their name, date of birth, address and a scan of their government-issued photo ID to the Treasury Department. When the information changes, updated information must be submitted to FinCEN's database within 30 days. Failure to file could lead to a criminal penalty of up to two years of prison time and fines of up to $10,000 per violation.
Tuberville asked, "Why does the federal government need this information in the first place? The goal of the CTA was to crack down on shell companies used to commit crimes. The reality is lawbreakers are not going to file with FinCEN. Instead, the law will place a massive administrative burden on millions of hard-working American business owners."
The CTA legislation had been pushed by U.S. Ron Wyden (D-Ore.) and former U.S. Rep. Carolyn Maloney (D-N.Y.) and slipped into the fiscal year 2021 National Defense Authorization Act. After a veto by then-President Donald Trump and a subsequent congressional override vote, the bill became law on January 1, 2021, and it went into effect this year.
"Many in Washington and most outside the D.C. beltway have no idea this law exists – much less the heavy criminal penalties associated with it," Tuberville declared.
All "substantial owners" of existing businesses must file by January 1, 2025. For entities created on or after January 1 of this year, substantial owners have 90 days to file.
"Large businesses with powerful lobbyists got a carveout in the law and do not have to comply. While the little guy has to struggle with all this red tape, LLCs with more than 20 employees and greater than $5 million in revenue do not have to file—another win for the special interest groups over 'We the People,'" said Tuberville.
Excerpt from the op-ed as follows:
The criminal penalties imposed by the law open the door for abuse by the IRS and politically motivated prosecutors with an axe to grind. The IRS has a history of singling out certain taxpayers for scrutiny based on their religious and political beliefs. Remember Lois Lerner? In an America where justice is becoming less equal by the day and prosecutions have been used to target political opponents, the CTA places yet another arrow in the quiver of bad actors at the IRS and in our justice system.
To add insult to injury, FinCEN has done little to nothing to educate Americans on the CTA and the harsh consequences of noncompliance.
I am introducing the Repealing Big Brother Overreach Act to overturn the CTA in its entirety. My bill would provide millions of small businesses and entrepreneurial Americans with regulatory and compliance relief and remove a weapon for political persecution from rouge prosecutors and the IRS.
I am proud to be joined in this effort by Congressman Warren Davidson (R-Ohio), who is filing a companion bill in the U.S. House of Representatives. If Congress fails to act on this legislation, millions of American small business owners could be in for a rude awakening next year.
Jim' Zig' Zeigler writes about Alabama's people, places, events, groups and prominent deaths. He is a former Alabama Public Service Commissioner and State Auditor. You can reach him for comments at ZeiglerElderCare@yahoo.com.
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