Bill seeks extension for new small business reporting requirement
The AVMA is drawing attention to a little-known financial reporting requirement that took effect January 1 and applies to most veterinary practices.
The new requirement comes from the Corporate Transparency Act (CTA) that Congress passed in 2020 to root out shell companies. It mandates that certain small U.S. businesses report ownership information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) or face civil and criminal penalties.
The CTA reporting requirement applies to U.S. businesses with fewer than 20 employees and $5 million in annual revenue, which describes a majority of veterinary practices.
Critics say the Treasury Department failed to properly educate small businesses about the new reporting requirements, however, and business owners should be allowed more time to comply with the law.
As a remedy to this problem, legislators introduced the Protect Small Business and Prevent Illicit Financial Activity Act (H.R. 5119/S. 3625), which aims to do just that. Specifically, the bill would have existing companies file their initial ownership report within two years. Current regulations require the report within one year.
Additionally, the legislation would have new companies file their initial ownership report or existing companies report updates or changes in ownership within 90 days. That’s 60 days more than the current regulations, which require filing either of those reports within 30 days.
It is important to note that earlier this month, a federal court ruled the CTA was unconstitutional; however, FinCEN indicated that it would still continue to enforce the reporting requirement.
The House of Representatives passed H.R. 5119 in December 2023 while S. 3625 has been in the Senate Committee on Banking, Housing, and Urban Affairs since January.
On March 19, the AVMA joined the National Federation of Independent Business, the S Corporation Association, the National Small Business Association, and over 120 other trade associations in a letter to Congress supporting the legislation.