Advocacy in action blog

Recent news reports indicate that some congressional Republicans may be amenable to a so-called "millionaire tax" that would raise the highest federal individual income tax rate to around 40%. NAIFA opposes this proposal due to the harm it would likely cause hundreds of thousands of pass-through corporations. Many owners of these small, often Main Street, businesses organized as S corporations, partnerships, and sole proprietorships would face large tax increases. 

The U.S. Treasury Department's Financial Crimes Enforcement Network released an interim final rule that eliminates a beneficial ownership information (BOI) reporting requirement for U.S. businesses. The rule exempts domestic reporting companies and U.S. citizens and residents who are beneficial owners of foreign reporting companies.

Prior to passage of the House budget resolution, NAIFA joined a letter from a coalition of Main Street Employers to Speaker of the House Mike Johnson and House Minority Leader Hakeem Jeffries urging passage of the resolution to protect S corporations from untenable tax increases. The resolution was passed on February 26 and has been sent to the Senate, which has been working on a separate budget resolution.

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department has announced that it will further delay enforcement of the Corporate Transparency Act (CTA). The CTA requires upwards of 32 million U.S. businesses to submit beneficial ownership information (BOI) reports to the U.S. Treasury Department, and Treasury had set a new deadline of March 21. A release by FinCEN said it will "not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information (BOI) reports."

The on-again, off-again Corporate Transparency Act (CTA), which requires upwards of 32 million U.S. businesses to submit beneficial ownership information (BOI) reports to the U.S. Treasury Department, is back on with a filing deadline of March 21. A February 18 U.S. District Court decision lifted an earlier injunction that had paused enforcement of the BOI reporting requirement. Generally, the legislation exempts securities brokers or dealers, licensed insurance producers, public accounting firms, and several other types of companies, but many of the business owner clients of NAIFA members are subject to the CTA.

Confusion over the status of the Corporate Transparency Act (CTA) is causing hardship for businesses across the country. The legislation, passed in 2021, requires an estimated 32.5 million businesses to file paperwork providing sensitive information about ownership with a division of the U.S. Department of Treasury by January 1, 2025. Under the law, companies that fail to comply would face fines of up to $590 per day. A federal court has issued a preliminary injunction that prevents the Treasury from enforcing the reporting requirements, but that decision is under appeal.

This issue is important to NAIFA because many NAIFA members are business owners or provide financial services for small business clients, even if the CTA does exempt securities brokers or dealers, licensed insurance producers, public accounting firms, and several other types of companies. NAIFA has joined a group of trade organizations supporting legislation that would delay enforcement of the reporting requirements by one year even if the court’s preliminary injunction is lifted. In a letter to Congressional leadership, NAIFA and the other organizations strongly urge lawmakers to include language delaying the CTA requirements in a continuing resolution (CR) that would fund the government into the new year. Doing so would remove a great deal of uncertainty for American businesses.

The larger funding CR is currently hung up in Congress due to disputes over issues unrelated to the CTA funding provision. 

NAIFA recently signed onto a letter supporting Congressman Lloyd Smucker's (R-PA, 11th District) newly introduced bill that would make the Section 199A deduction permanent. The bill had over 80 co-sponsors from both aisles and received unanimous support from the 25 Republicans on the Ways & Means Committee. The bill is similar to S.1706 introduced by Senator Steve Daines (R-MT) making the support for minimizing tax hikes bipartisan and bicameral. 

An important tax deduction for many individual- and family-owned businesses –  Section 199A of the Tax Cuts and Jobs Act – is set to expire in just two years. NAIFA strongly supports legislation sponsored by Senator Steve Daines (R-MT) that would make permanent the 20% deduction for pass-through businesses.