Ohio small businesses seek clarity as Congress weighs federal rule

By Farah Siddiqi

Ohio small business owners may be breathing a sigh of relief after a federal rollback of a controversial reporting rule but without action from Congress, the issue could resurface.

At stake was a requirement for millions of business owners to share personal information or face steep penalties. The Beneficial Ownership Information rule required any U.S. business person with at least 25% ownership or significant control of the business to submit details like their birth date, address and ID documents to the federal government.

Josh McLeod, director of federal government relations for the National Federation of Independent Business, said the rule has created major confusion and concern for business owners.

"It's so massive, 32.6 million small businesses were projected to register with FinCEN, most of whom, have never heard of these requirements," McLeod explained. "When we survey identified NFIB members, 83% came back and said, I don't know what this is."

FinCEN is short for the Financial Crimes Enforcement Network, part of the U.S. Treasury Department. Under the rule, failing to file could lead to fines up to $10,000 and two years in prison. At the end of last year, nearly 17% of Ohio small businesses had filed with FinCEN. Backers of the rule said it was needed to crack down on fraud by "shell" companies.

In March, the Trump administration announced it would no longer enforce reporting for U.S.-owned businesses but McLeod pointed out without legislation, the rule could return and data already submitted could remain vulnerable.

"This database, it's going to be open to local, state, federal, international law enforcement and intelligence agencies that don't have to get a warrant," McLeod emphasized. "I think small businesses should be very vigilant regarding their personal identifiable information."

He added the federation is urging Congress to repeal the rule entirely and require deletion of all previously submitted ownership data. Ohio has the largest federation membership in the nation, underscoring the rule’s potential effect in the state.

Reporting by Ohio News Connection in association with Media in the Public Interest and funded in part by the George Gund Foundation.