Late last month, the U.S. House of Representatives, including four Texas Republicans and all but two Democrats from the Lone Star State, voted to pass the Corporate Transparency Act of 2019, legislation critics claim will place an undue burden on small business owners.
House Resolution 2513, which passed the House by a vote of 249 to 173, requires shell companies to disclose their actual ownership at the time the company is formed to prevent anonymous owners from evading law enforcement and covering up illegal activities such as money laundering.
Among the Texas delegation on Capitol Hill, Pete Olson (22nd District), Michael McCaul (10th District), Kay Granger (12th District) and Roger Williams (25th District) were the Republicans from the state to vote in favor of the measure while Henry Cuellar (28th District) and Vicente Gonzalez (15th District) were the lone Texas Democrats to vote against it.
Under HR 2513, a national database of beneficial owners of corporations and limited liability companies in the U.S. will be created “to assist law enforcement in detecting, preventing, and punishing terrorism, money laundering, and other misconduct.” Affected entities are required to register with the government and update the registration every year.
A study by the NFIB Research Center says that the measure is well-intentioned, but would do more harm than good for small businesses.
"While well-intentioned, the Corporate Transparency Act would create material risks and burdens for small businesses," Michael Chow with the NFIB Research Center wrote in an analysis of the bill for the organization's members.
"An obvious concern is the increased risk that personally identifiable information of business owners may be abused or hacked by actors with malicious intent. Another consequence of a new information reporting requirement mandated by the federal government is additional paperwork burdens imposed on covered entities."
Chow goes on to estimate that small business owners would have to spend an additional 13.2 million hours completing paperwork over a 10-year period to comply with the measure’s mandates, adding $537 million in costs.
The Senate is currently in possession of the bill. It also has its own bipartisan version, with the Banking Committee chair calling the issue a priority.
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