Small Businesses Challenge Corporate Transparency Act in Federal Court


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Small Businesses Challenge Corporate Transparency Act in Federal Court

Small Businesses Challenge Corporate Transparency Act in Federal Court 150 150 admin

The National Federation of Independent Business (NFIB) has filed an amicus brief urging the U.S. Court of Appeals for the Fourth Circuit to reject the Corporate Transparency Act (CTA), arguing that its reporting requirements impose unconstitutional burdens on small businesses. The brief was filed in Community Associations Institute, et al. v. U.S. Department of Treasury, a case that challenges the CTA’s beneficial ownership reporting mandates.

NFIB’s brief questions whether Congress has the authority to impose the CTA’s reporting requirements under the Commerce Clause, arguing that the law regulates neither activity nor economic conduct.

“The Corporate Transparency Act does not regulate activity, let alone economic activity, while also imposing burdensome reporting requirements on small businesses and raising numerous privacy concerns,” said Beth Milito, Vice President and Executive Director of NFIB’s Small Business Legal Center. “NFIB will continue to advocate for the small business community by contesting this harmful law.”

Legal Arguments Against the CTA

NFIB’s brief presents three core arguments:

  1. The CTA does not regulate activity, making it incompatible with Congress’s Commerce Clause authority.
  2. To satisfy the substantial effects test, Congress must be regulating economic activity, defined as the introduction, production, or exchange of goods or services.
  3. Because the CTA regulates noneconomic activity, it does not meet the Commerce Clause’s legal standard.

In addition to this case, NFIB’s own lawsuit challenging the CTA remains active. Meanwhile, NFIB is advocating for legislative relief through the Repealing Big Brother Overreach Act, a bill that would repeal the CTA and eliminate its beneficial ownership reporting requirements for small businesses.

The case remains pending before the Fourth Circuit as NFIB continues its efforts to challenge federal mandates that it views as overreach.

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This article, “Small Businesses Challenge Corporate Transparency Act in Federal Court” was first published on Small Business Trends

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