Gary James is the President of Dynalab, Inc., a small manufacturer based in Reynoldsburg. He is also a partner of the Job Creators Network Foundation.
Ohio’s small businesses are being threatened by a new federal law that will take effect later this year. Entrepreneurs who do not fully comply will face heavy fines and even jail time. As chairman of the Senate Banking Committee, Sen. Sherrod Brown (D-OH) should help delay — if not outright repeal — the flawed law.
The Corporate Transparency Act (CTA) – enacted in 2021 – requires some businesses to disclose personal information about its owners and officers. More specifically, the soon-to-be-enacted law will require the names, dates of birth, personal addresses and photocopies of passports or driver’s licenses of anyone who has “substantial control” of the company. And this information must be updated within 30 days of any change.
In this scenario, if a manager suddenly resigns and someone else is quickly promoted, the business owner must remember to report the change to the US Treasury Department, otherwise they are out of compliance. This bureaucracy prevents the business from focusing on its real needs: serving its customers.
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The policy aims to crack down on bad business schemes, including money laundering and other illegal financial practices. It’s an understandable goal and a sympathetic way for politicians who support the law to tailor it to their constituents. But this characterization misses the mark by a mile.
Contrary to what the name suggests, the CTA has nothing to do with big corporations. In fact, large and medium-sized companies are completely exempt from the paperwork and reporting requirements. The law specifically targets small businesses that employ fewer than 21 workers or receive less than $5 million in annual revenue. So the local restaurant or independent gym down the street is seen by our politicians as a threat, but the big bank handling trillions of dollars in assets is not a problem! Beyond the blatant invasion of privacy, the changes will create an additional expense for small businesses that are already operating under thin margins with our recent inflation.
Weaponizing personal information?
It’s also not hard to imagine politicians using the personal information of small business people to scare non-Kool-Aid drinkers on certain policy issues. Case in point: the Internal Revenue Service’s targeting of conservative groups following the Tea Party movement over the past decade. And to add insult to injury, most businesses don’t even know this new law exists. According to a survey by the Job Creators Network Foundation, only about a third of small businesses nationwide are aware of the CTA — meaning many Americans are facing stiff penalties, including up to $10,000 fines and two years in prison, for the rules they don’t follow. I don’t even know they are in the books.
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Fortunately, the CTA has hit some roadblocks in the courts. But relief from the legal system may come too late. As a sure failure, Congress must act.
Legislation to delay implementation of the law sits before the banking committee – Brown’s domain. If he were to allow this legislation to come to the Senate, small businesses could have enough time to prepare — or, in a perfect world, enough time for the CTA to be struck down. Earlier this year, Brown posted on X: “I will always support Ohio’s small businesses.” He has to prove it.
Gary James is the President of Dynalab, Inc., a small manufacturer based in Reynoldsburg. He is also a partner of the Job Creators Network Foundation.