On Tuesday, the U.S. House of Representatives passed H.R. 2513, the “Corporate Transparency Act,” sponsored by Rep. Carolyn Maloney (D-New York) and Rep. Peter King (R-New York). The legislation passed the House with a vote of 249-173.
The legislation would require nearly every small business with fewer than 20 employees to file new reports on their beneficial ownership with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). All businesses would have to comply with the new requirement annually—starting within two years of the law’s enactment for existing businesses or upon incorporation of a new business.
FinCEN would require the disclosure of any individual who “receives substantial economic benefits from the assets” of a business. The legislation defers to regulators at the Treasury Department to define “substantial economic benefits.” The penalties for failure to comply with these reporting requirements are quite severe with civil penalties of up to $10,000 and criminal penalties of up to three years in prison.
When this legislation was introduced in May, the Big “I” was the only producer group that advocated on behalf of agents and brokers in an attempt to exclude them from this new onerous requirement. The Big “I” was successful in including a full exemption for agents and brokers in the bill by showing that insurance producers already provide beneficial ownership information to state regulators and that the additional burden of providing it to FinCen would be duplicative and unnecessary.
The Big “I” will continue to advocate for exemptions in similar pieces of legislation that may be considered in the Senate.
Joseph Cortina is Big “I” director, federal government affairs.