MSCI Continues Advocacy Regarding The Corporate Transparency Act

The Metals Service Center Institute (MSCI) has joined more than 120 business groups in asking U.S. Senate leaders to vote on a bill that would delay for one year the filing deadlines associated with the Corporate Transparency Act (CTA).

As Connecting the Dots readers are aware, the CTA requires nearly every U.S. business to report, and to continuously update, information regarding their beneficial owners. The CTA includes civil and criminal penalties of up to $10,000 and two years of jail time for failing to report this information. These penalties could apply even in cases that amount to nothing more than a paperwork violation.

The letter to Senate Banking Committee Chair Sherrod Brown (D-Ohio) and Ranking Member Tim Scott (R-S.C.), available here, MSCI and the 120 other groups argue the CTA’s paperwork burdens fall primarily on small businesses. “In general, the CTA’s reporting requirements apply only to entities with 20 or fewer employees or less than $5 million in revenue. Thus, of the 32.5 million entities that … will be affected by the law, the vast majority will be small businesses — the very companies least equipped to shoulder the regulatory burden imposed by the CTA,” the letter said.

The letter concluded a one-year delay of the CTA’s filing deadline would:

• Allow the legal process begun with the recent decision in National Small Business Association v. Yellen to work its way through the appellate and supreme courts (more on this case below);
• Be consistent with congressional intent to give covered entities two years to comply with the CTA’s reporting requirements; and
• Provide the business community and the Financial Crimes Enforcement Network additional time to educate millions of small business owners regarding the new reporting requirements and the penalties resulting if they fail to comply.

Earlier this month, in National Small Business Association v. Yellen, the United States District Court for the Northern District of Alabama ruled the CTA is unconstitutional. The court’s injunction was narrow, however, and applied to the plaintiffs named in the case only, namely members of the National Small Business Association.

To fully relieve small businesses of the CTA’s unconstitutional burdens, members of the U.S. Senate must approve S. 3625, the Protect Small Business and Prevent Illicit Financial Activity Act, and President Joe Biden must sign that bill into law. The U.S. House of Representatives already has approved a similar bill through an overwhelmingly bipartisan 420-1 vote.