Small businesses are assessing the potential costs of complying with requirements proposed in both chambers of Congress aimed at limiting the use of anonymous shell companies, The Wall Street Journal reports.
The House in October passed a bill requiring most limited-liability companies, among other firms, to tell the Treasury Department who their primary owners are. A companion measure has been introduced in the Senate. The legislation aims to crack down on entities that are used as vehicles for hiding or moving illicit funds.
The bills would require companies with 20 employees or fewer and no physical office to provide owners’ names and other personally identifiable information.
LLCs, often referred to as shell companies, provide owners with protections against lawsuits, among other financial benefits. They are frequently used by real estate investors and sole proprietors, those who run one-person businesses. Some LLCs are registered in the U.S. under the names of representatives who neither own nor operate them.
Passage of the House bill marked a victory for corporate-transparency advocates, following several failed attempts.
If enacted, the requirements could result in as many as 30 million beneficial-ownership filings annually, according to a Congressional Budget Office analysis of the House bill published in September. The analysis described the total cost to businesses as substantial without providing an estimate. Read the full story.
