Requiem for the Corporate Transparency Act?

If you want to start a small business in America, it’s enough to put yourself in front of potential clients and partners. So what good is having to send private details to a federal agency waiting for you to slip up?

That’s the unspoken reality of filing a Beneficial Ownership Interest report under the Corporate Transparency Act.

Separation of Powers

This legislation slipped under the radar attached to a 2021 defense spending bill and threatened to clamp down on American small businesses. That is, until Treasury Secretary Bessent refused to enforce it yesterday.

The idea was for federal regulators at FinCEN to have greater visibility into American companies. This would ensure they weren’t shells for foreign interests. For our protection.

But this came after a boom of business formations as more workers decided to try things on their own. Unless you had annual revenues greater than $5 million or more than 20 employees, your startup was going to be under greater scrutiny.

A Different Landscape

Now I’ve written about non-value added services in the past. But putting undue burden and surveillance on EVERY small business owner isn’t the solution.

Your Secretary of State already has all the information they need to register your business. If you break the law, they can already serve you notice. There’s no reason to give a federal subagency this level of power.

But why require this? Venture capitalist Marc Andressen warned on the Joe Rogan podcast how other alphabet soup members could threaten business owners if they publicly espoused unpopular opinions. Think about Dr. Mercola and his team being debanked for “reputational risk”.

This is not about foreign powers opening up shell companies.

This is about flexing control over startups and early stage small businesses. It raises the bar to entry for people who would benefit from becoming entrepreneurs while protecting larger, established business interests at their expense.

That’s just more impetus for the larger corporations to buy up and consolidate to gain synergies. Meaning lower service levels at the store across the street.

Know Your Rights

This is an office of pre-crime for small business. Streamlining prosecution through registration violates protections against unreasonable search and seizure and due process under your 4th and 5th amendment protections.

The only winners seem to be the law firms across the country who were willing to charge clients hundreds of dollars to file paperwork rather than stand up for their rights.

What happens as a result of that? How about losing all the hard won gains for innovative new ideas that came from the boom of the 2010s. Or a continued hollowing out of American cities that were making a comeback with the help of business incubators.

Put too much burden on the motivated and they stop stepping forward.

This is a step to take back Main Street. To keep competition healthy at the local level. This is creating more opportunities for startups and communities to thrive.

So contact your elected representatives today. Get their support to repeal the Corporate Transparency Act this session.

It’s time to let American startups get back to what’s important so our communities can thrive.