Central South Dakota News

U.S. Senator Mike Rounds and House Financial Services Committee Chairman Patrick McHenry, along with 77 colleagues, have sent a letter to Treasury Secretary Janet Yellen and Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki, requesting a delay in the implementation of beneficial ownership reporting requirements for small businesses.

The reporting requirements, set to begin on January 1, 2024, under the Corporate Transparency Act (CTA), would require most corporations and limited liability companies to regularly report information about their beneficial owners to FinCEN. However, the lawmakers argue that FinCEN is behind in educating small business owners about these requirements, with a National Federation of Independent Business survey finding that 90 percent of respondents were unfamiliar with the reporting obligations.

The letter states, "Even more concerning is that the CTA has civil and criminal penalties of up to $10,000 and two years of jail time for failure to comply." The lawmakers believe that the lack of awareness and education about the reporting requirements is alarming and must be addressed before the law is implemented.

In addition, FinCEN has yet to finalize two critical rules related to the reporting requirements: the "Access Rule" and the "Customer Due Diligence Rule." These rules specify the parameters for accessing the database, the purposes for which the information can be used, and how the sensitive information will be protected.

Therefore, the lawmakers are requesting that FinCEN delay the effective date for all beneficial ownership reporting requirements by a minimum of one year to allow for the finalization of these rules and to provide more time for small business owners to understand their reporting obligations. The additional time will also give FinCEN and the business community an opportunity to educate small business owners about the new requirements.

The letter was signed by several other senators and representatives who expressed their concern and support for the delay. The lawmakers believe that a one-year delay will give FinCEN sufficient time to finalize the necessary rulemakings and ensure that small businesses are adequately prepared for the new reporting regime.

In conclusion, U.S. Senator Mike Rounds, House Financial Services Committee Chairman Patrick McHenry, and their colleagues have requested a delay in the implementation of beneficial ownership reporting requirements for small businesses. They argue that FinCEN is behind in educating small business owners about these requirements and that additional time is needed to finalize critical rules and educate small business owners about their reporting obligations.

Click this link to access more information: https://www.rounds.senate.gov/newsroom/press-releases/rounds-mchenry-lead-77-colleagues-in-requesting-delay-for-unclear-reporting-requirements-for-small-businesses