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Abstract

For decades, the United States has had a reputation as the place to go for bad actors looking to launder money and fund criminal activities. Attempting to rectify this situation, Congress spent years drafting legislation to serve as a deterrent. The product, the Corporate Transparency Act (CTA), was the culmination of years of work by legislators across the aisle and multiple Congresses. The CTA’s mandatory reporting requirement sought to create a centralized database of information about all entities doing business in the United States, both foreign and domestic, and the individuals in positions of authority for each of those entities. However, following judicial challenges resulting in the law being deemed unconstitutional, the Executive Branch scaled back enforcement of the CTA. Under the Interim Final Rule (IFR), reporting requirements are no longer imposed on domestic reporting companies or American beneficial owners. This change was applauded by some, especially small businesses in the United States who argued that the reporting requirement was burdensome. Others, however, disapproved of this change and argued that the IFR runs counter to Congressional intent and is destined to be ineffective.

This Note argues that, given the recent court rulings, Congress should pass an amended version of the CTA that is both tailored to the needs small businesses and satisfies Congress’s original intent to create legislation to combat illicit activities. This Note argues that such a new law should focus on: (1) providing dollar-for-dollar tax credits to reporting companies for the expenses incurred in preparing the mandated reports, (2) removing all exemption categories, and (3) limiting the scope of access to the beneficial ownership information (BOI) database. Such a law would properly address small businesses’ interests and would not impede the government’s ability to meet its chief objectives for passing the law.

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