MSCI Tells Congress To Delay Corporate Transparency Act Implementation
Early next year, a new law will go into effect in the United States that will impose significant new compliance costs on businesses, especially small firms.
The Corporate Transparency Act (CTA) will require 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.
According to the S-Corp Association, the federal government “has significantly underestimated the cost burdens associated with the new reporting regime, it has relied on vague and arbitrary standards in laying out the criminal and civil penalties under the statute, and it has implemented filing deadlines for newly-formed entities which, in some cases, are impossible to meet.”
Additionally, of the three primary regulations necessary to implement the CTA, only one has been completed. The second is still at the “proposed” stage and the third has yet to be released even as a proposed rule.
For these reasons, last week MSCI joined with the S-Corp Association and dozens of other groups to send a letter asking federal lawmakers to delay the CTA’s reporting requirements by one year. That additional time would give the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) enough time to finish its work on the regulatory front to educate companies about their need to comply with the requirements. (According to research from the National Federation of Independent Business, 90 percent of small business executives were entirely unfamiliar with the reporting requirements.)
The letter, available here, noted, “The scope of the data collection is beyond anything the federal government has ever attempted outside of the tax code. … FinCEN expects to receive more than 32 million separate reports in 2024, with an additional five to six million filings each year thereafter.”