ADA joins coalition letter calling for Corporate Transparency Act reporting pause

Legislation would delay filing deadline and penalties by one year

The ADA and more than 120 other trade associations are asking Congress to pause new requirements for small businesses to file ownership reports. 

The Association signed on to a coalition letter calling for temporary relief from filing requirements under the Corporate Transparency Act through passing the Protect Small Business and Prevent Illicit Financial Activity Act. The Corporate Transparency Act works to mitigate money-laundering operations posing as businesses by requiring that certain small businesses that meet specific requirements report information about beneficial owners to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, or FinCEN, about their ownership. 

These businesses, including many dental practices, have less than one year to file beneficial ownership information reports before facing penalties. Dental practices must file under the act if they either employ fewer than 20 people or generate less than $5 million (gross receipts) in revenue annually. 

This comes after a federal judge in the U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act is unconstitutional as Congress does not possess the authority to require companies to disclose personal stakeholder information. The ruling only affects the plaintiffs in this particular case and is still in full effect for all other qualifying businesses.  

The legislation would delay the Corporate Transparency Act’s filing deadline and accompanying penalties by one year. In a March 19 letter addressed to Sens. Sherrod Brown, D-Ohio, and Tim Scott, R-S.C., the coalition said the delay would allow the recent decision in National Business Association v. Yellen to work its way through the Appellate and Supreme Courts.

In January, the ADA wrote a letter to Sens. Chuck Schumer and Mitch McConnell urging an extension of the deadline for companies to report ownership information to FinCEN. In that letter the Association said that extending the deadline would “allow FinCEN more time to educate the public on reporting and would help dental practices and other small businesses to be able to better understand what is required of them.”

The most recent letter said the delay would be consistent with congressional intent to give covered entities two years to comply with the Corporate Transparency Act’s reporting requirements and provide the business community and FinCEN additional time to educate millions of small business owners regarding the new reporting requirements and the “onerous” penalties resulting if they fail to comply.

“The [Corporate Transparency Act] began as an earnest attempt to combat illicit financial activity but has morphed into a bureaucratic nightmare targeted squarely at America’s smallest businesses,” according to the letter. “It subjects covered entities and their ‘beneficial owners’ to vague and complex reporting requirements while putting their sensitive personal information at risk.”

The letter notes that the Corporate Transparency Act originally called for a reporting deadline of “not later than two years after the effective date of the regulations” for existing entities, but that FinCEN shortened this deadline to one year in its rulemaking. It also highlights that filing under the act began in January, but fewer than 2% of covered entities have submitted their required information, likely because many small businesses are not familiar with the new law.  

“A one-year delay, as called for in H.R. 5119, would give the court process time to reach a conclusion, grant small businesses much-needed time to fully understand these latest developments and afford FinCEN and the business community the opportunity to continue their education and outreach efforts to ensure that all covered small businesses are aware of their new reporting obligations,” the letter reads. 

For more information or to file a beneficial ownership report, visit fincen.gov/boi. The deadline to file is Jan. 1, 2025.