New Law Forces Small Businesses To Cough Up Personal Data

The Corporate Transparency Act (CTA) is an aggressive domestic program to federally register millions of unsuspecting small business owners under the guise of an “anti-money laundering initiative.”

By the end of this year, Americans will be required to hand over their small businesses’ private data — such as owners’ names and home addresses — to the federal government’s law enforcement database, operated by the Financial Crimes Enforcement Network (FinCEN), housed under the Department of the Treasury. Such small businesses include limited liability companies, corporations, “and any other entities created by the filing of a document with a secretary of state or any similar office in the United States.”

They will also be required to turn over personal data, which can include uploading their driver’s license, passport, marriage certificate, and other non-business related information, into this law enforcement database.

This needs to be a front and center campaign issue to protect more than 33 million small business owners, who employ 61 million Americans.

The Department of the Treasury already has a history of targeting innocent Americans. During the Lois Lerner scandal, the IRS was forced to admit that it used political partisanship to specifically target conservative groups. The unelected bureaucracy was ultimately forced to settle with the innocent Americans they targeted.

CTA is the for-profit equivalent of Department of the Treasury’s partisan overreach. With the IRS scandal, nonprofit organizations with the word “tea party” and “patriot” were targeted and subjected to further scrutiny and/or outright denial of their tax-exempt 501(c)(3) status. Under the CTA, an overly aggressive anti-Second Amendment bureaucrat could decide to do a word search for “gun,” “firearm,” “patriot,” “freedom,” or similar, and they would have a ready list of small business owners to target, investigate, and audit. It happened before with nonprofits, and it will happen again with “for profit” small businesses.

The true goal of CTA appears to be setting up yet another new database of citizens to monitor, observe, and punish. The federal government is moving quickly to implement the CTA, as millions of small business owners in the United States have no idea this law even exists (only 13 percent of businesses in California, 5 percent in Ohio, and 4 percent in Pennsylvania have registered). Millions of businesses owners face becoming felons in three months unless they comply.

There are currently seven separate lawsuits challenging the validity of the law. Last year, the House of Representatives passed a bill to give businesses more time to comply, but the bill is sitting in the Senate going nowhere. A recent email from their accountant may have been the first time many businesses realized this law exists. The legal confusion and seeming lack of urgency to inform the public suggest that FinCEN’s true intent is to “catch” millions of small business owners in “non-compliance” so that they can be investigated and audited by Department of the Treasury and punished. Serious criminals will not be concerned about paperwork violations. Mandatory compliance is required by January 1, 2025, or business owners will be subjected to hefty fines of $591 dollars per day (or up to 10 percent of a company’s annual receipts) and up to two years in federal prison.

Unconstitutional Power Grab

President Trump vetoed this unconstitutional power grab, as part of the National Defense Authorization Act of 2021, but his veto was overridden. In an unprecedented act of overreach, the feds are moving to collect data on all small business owners, who make up the backbone of the U.S. economy, for reasons that seem murky at best. And the information collected goes to FinCEN, the counterterrorism arm of the Treasury. Business owners have to register with a terrorism department. This seems to infer criminality on millions of law-abiding citizens.  

Under CTA, for-profit business entities with fewer than 20 employees and under $5 million in revenue are in the crosshairs. But businesses that make more than $5 million annually, or employ more than 20 full-time employees, are exempt from this invasive self-reporting requirement that could put owners in prison. That means BlackRock, Amazon, Facebook, Pfizer, etc., can operate “business as usual,” but “Grandma’s Donut Shop” will be required to show her “paper’s please” if she wants to make a living.

Massive Economic Surveillance Program

Business registration and entity creation has always been handled at the state level through State Corporation Commissions. With the CTA, even though a business is a registered entity at the state level, if it does not then self-report and register into a criminal database at the federal level, owners will not be able to operate the business. The federal government is overreaching into a state rights issue and creating a massive database in violation of the commerce clause. State attorneys general in every state should be weighing in on this issue. Unfortunately, their silence is deafening.

Every small business owner in America needs to make their voice heard on this issue, and lawyers who care about the future of this country should be lining up to represent them pro bono. CTA is the last nail in the coffin of what remains of the illusion of a “free market” economy in the United States. It is nothing more than a massive economic surveillance program with no discernable oversight.

Lawsuits

A federal judge in Alabama has already ruled this law unconstitutional, yet the federal government continues to move full speed ahead. The National Federation of Independent Business (NFIB) has an ongoing legal challenge against the U.S. government and the CTA. However, while a ruling bars the U.S. Treasury from enforcing the CTA against NFIB, it does not enjoin enforcement against others. The government has appealed the ruling.

In another legal challenge from the National Small Business United (NSBU), the NSBU alleges that Congress exceeded its powers in requiring that small businesses report their beneficial ownership information to FinCEN. This battle could go all the way to the Supreme Court.

Both camps — Republicans and Democrats — need to weigh in on this before the November election. This is the most dangerous step the United States has ever taken towards nationalizing small private business ownership under a federal umbrella; a tactic long practiced and executed by Marxist governments. It’s time to stand up to this blatant attack on state’s rights that seeks to control and destroy the economic lifeblood of America.

Peter McIlvenna is host and co-founder of Hearts of Oak, a free speech podcast based in the United Kingdom. He is chief of staff for Lord Pearson of Rannoch in the House of Lords and served as national campaign manager for Nigel Farage’s UKIP party during the local and European parliament elections in 2019.