The Financial Crimes Enforcement Network (FinCEN) on Friday paused its requirement for 33 million small business owners to file “beneficial ownership reports” with the federal government, under penalty of heavy fines and imprisonment, as a lawsuit seeking to prevent the enforcement reaches the U.S. Supreme Court.
While the U.S. Supreme Court reversed a lower court’s ruling which prevented FINCEN from requiring small business owners to file the reports, the agency announced Friday that enforcement of the data collection will remain paused due to a lower court’s ruling in another case seeking to block the enforcement.
“As a separate nationwide order issued by a different federal judge in Texas still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action,” the agency confirmed in its announcement. “Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force.”
Should the lawsuits fail to prevent FinCEN from enforcing the requirement, any small business that grosses less than $5 million annually could be fined up to $250,000 per year and face up to five years in prison as part of a scheme that Job Creators Network CEO said was designed to exclude large corporations.
“Large corporations have been carved out of it, so it’s only small businesses that have to comply – the ones that are probably going to be hit with the most burdensome regulation of all,” Ortiz said last September, during an appearance on The Michael Patrick Leahy Show.
He told Michael Patrick Leahy, the editor-in-chief of The Tennessee Star, ““You’re going to have millions and millions of small business owners that will be fully exposed to the federal government coming, knocking at their doors, arresting them, or fining them.”
Should the Supreme Court ultimately reject the lawsuits seeking to end the requirement, its future may nonetheless be uncertain, as it was passed as part of the Corporate Transparency Act (CTA)Â of 2021, which was passed as part of the 2021 National Defense Authorization Act (NDAA) that was vetoed by President Donald Trump before he left office during his first term.
Tying the legislation to funding for the military, Congress ultimately overturned the president’s veto and passed the legislation.
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Tom Pappert is the lead reporter for The Tennessee Star, and also reports for The Pennsylvania Daily Star and The Arizona Sun Times. Follow Tom on X/Twitter. Email tips to [email protected].