Federal Judge Stops Corporate Transparency Act Reporting

The overreaching reporting mandates in the Corporate Transparency Act (“CTA”) have resulted in several lawsuits across the country where plaintiffs point out its unconstitutional and egregious invasion of privacy, among other problems.

On December 3, a Texas federal judge issued a nationwide injunction blocking the CTA in a lawsuit where small business owners, firearms retailer Texas Top Cop Shop, the Libertarian Party of Mississippi, and the National Federation of Independent Business challenged the CTA on constitutional grounds. The injunction leaves small businesses hanging; some attorneys advise not filing and some are advising their small business clients to go ahead and file anyway.

Corporate Transparency Act Oversteps Constitution, Says Judge

In his Order granting the nationwide stay, Judge Amos L. Mazzant III of the United States District Court for the Eastern District of Texas “strongly rebuked the CTA for overstepping constitutional boundaries,” saying “For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government.”

Plaintiffs say

the CTA is unconstitutional in that it exceeds Congress’s authority over the states, improperly compels speech and contradicts the right of anonymous association guaranteed by the First Amendment, and violates the Fourth Amendment by forcing the disclosure of private information.

Forbes observes that Mazzant’s ruling

reaffirmed that the Constitution’s constraints on federal power remain relevant even in addressing modern challenges. This case could set a precedent for courts to scrutinize federal initiatives that intrude into areas historically managed by states.

(emphasis added)

The Treasury Department has appealed Mazzant’s ruling to the United States Court of Appeals for the Fifth Circuit.

Elizabeth Sotallaro

God’s child, Arkansas conservatarian
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