CHARLESTON — West Virginia Attorney General J.B. McCuskey is leading a coalition of 26 states in supporting a challenge to the Corporate Transparency Act, which he says harms small businesses.
The CTA would require owners and part-owners of an estimated 32.6 million small businesses across the country to register personal information with the Financial Crimes Network or FinCEN. FinCEN estimates that in just the first two years of CTA, American small businesses will be forced to spend more than 150 million hours and nearly $30 billion trying to comply with the CTA reporting requirements. Actual costs could be even higher.
McCuskey calls the CTA a holdover of Biden-era efforts to exert federal authority over areas of traditional state control.
“Burdensome regulations are killing our small businesses, which have long been the backbone of our economy in this country,” McCuskey said. “Thankfully, President Trump has recognized how harmful CTA is to small businesses and has vowed not to enforce the act.
“I am proud to lead this coalition of attorneys general in supporting the key challenge to the legality of the law, settling the issue once and for all to restore states’ rights and to protect our small businesses now and into the future.”
The case at issue is before the U.S. Fifth Circuit Court of Appeals and styled Texas Top Cop Shop Inc. et al. v. Pamela Bondi, Attorney General of the United States et al.
In its brief, the coalition of AGs says the CTA’s reporting requirements “reach indiscriminately across the smallest players in the economy to extract and archive a trove of personal data … at an expected cost of almost $22 billion in the first year alone.”
The AGs say they filed the brief to explain how the CTA disrupts the balance of federalism “on which our constitutional system depends” and burdens too many Americans.
“(The states) take seriously their longstanding and primary role in regulating corporations — that is, ‘entities whose very existence and attributes are a product of state law,’” the brief states. “They are also concerned with Congress overstepping into our traditional zones of authority when it abuses its enumerated Commerce Clause power.
“And the states are sensitive to the ways burdensome legislation (and its associated regulations) hurt their residents and small businesses. The CTA implicates all three of these concerns.”
In another amicus brief, the New Civil Liberties Alliance urges the court to uphold a preliminary injunction against enforcement of the Corporate Transparency Act. The government cannot be allowed to maintain this unconstitutional statute, which stretches beyond Congress’s and the Administrative State’s authority to regulate Americans.
This week, the U.S. Treasury Department announced it won’t take enforcement action against American companies for not divulging ownership information under the CTA. The multistate amicus brief challenges the constitutionality of the law, arguing, among other things, that states have always had the authority to regulate corporations and establish corporate laws in their states, not the federal government, thus CTA disrupts the balance of federalism.
McCuskey co-led the coalition of Republican attorneys general with Kansas AG Kris Kobach and South Carolina AG Alan Wilson. Other states joining the group are Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia and Wyoming.