For small business owners who haven’t heard of the Corporate Transparency Act, READ THIS NOW

March 26 – The Corporate Transparency Act went into effect on January 1, 2024, and if you haven’t heard of it before, you’re not alone. 

It’s not getting a whole lot of traction in the news, but it affects people who own an S Corporation, an LLC or a partnership. 

The purpose of the act is to apparently try to combat tax fraud, money laundering, and financing for terrorism by capturing more ownership information for specific U.S. businesses operating in or accessing the country’s market.

That means small businesses have to provide all ownership information for everyone involved in the company. 

Businesses that do not comply may be looking at criminal or civil penalties – and the fines are substantial. The deadline to provide the information is January 1, 2025 and if it’s missed, it’s $500 a day in civil penalties and then there’s criminal prosecution up to $10,000 and two years in prison. 

One major question is could this act be modified? 

Congressman John Joyce said, “The Corporate Transparency Act is truly one of the pieces of legislation that came out of the Democrat Congress before we flipped the House in 2023. This bill will require millions of small business owners to begin regularly reporting on their beneficial owners. That means the people who ultimately own or control the company and that report will go to the Financial Crimes Enforcement Network this year. While the goal of this legislation was to target shell companies who are involved in drug deals and illicit transactions, this bill goes too far, and ultimately ends up hurting those small business owners who are simply trying to follow the law. Previously, I served on the Small Business Committee and I know that small businesses are the backbone of our community. But we started hearing from you at 103.7 and hearing from individuals throughout Pennsylvania 13 that they’re worried about starting small businesses because of this law. So to address this, I’ve responded by co-sponsoring legislation that would block the rollout of the Corporate Transparency Act, and it’s critical that we get this bill passed in the US House. This is an important step right now because this law is being challenged in the courts, showing that the House of Representatives first and foremost recognizes the need to address this issue.” 

Michele Jansen of NewsTalk 103.7FM noted, “What really is concerning, not only does it give this extraordinarily ridiculous burden to small businesses, where they have to be fearful if they make a misstep, there’s some serious consequences for those missteps, financially and even beyond that, really horrifying. I know I myself, not necessarily the most organized person in the world, I’d be so afraid of making a mistake. But then there’s also the wonder right now, we see such unequal application of the law or government scrutiny right now and we all feel it, we all see it. Wouldn’t a small business then even become paranoid that I will be targeted if I don’t support the right things? If I don’t go along with the right ways of thinking, could this be used against me?”

Joyce said, “We need to protect small businesses and we cannot allow anyone, any taxpayer to feel like laws can be used specifically against them. The uneven application of laws, we’ve seen the Biden administration, grab that, and that be the ability to affect so many Americans. So that’s why we’re working to make sure that this piece of legislation is not implemented.”

Pat Ryan of NewsTalk 103.7FM wondered, “Could you just defund or could you just put the brakes on the money going to fund the project? Could we do that one by one on a couple of different ones that are out there? Could you just say you know what? We’re not going to give you the money to go forward with this project.”

Joyce said, “Yes. That would be a part of the Corporate Transparency Act, that would stop the funding for that.”