Texas Court Halts Rollout of Corporate Transparency Act – RVBusiness – Breaking RV Industry News
The Corporate Transparency Act and its implementing regulations, which require U.S. business entities to report stakeholder information to the Treasury Department, were preliminarily blocked nationwide by a Texas federal court on Dec. 3, according to Bloomberg Tax.
Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued the injunction at the request of a family-run firearms and tactical gear retailer, called Texas Top Cop Shop Inc., among other co-plaintiff businesses and the Libertarian Party of Mississippi. Their lawsuit alleged that the CTA falls outside of Congress’s powers to regulate interstate and foreign commerce because it regulates incorporated entities regardless of whether they engage in commercial activity.
“For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government,” Mazzant wrote.
The CTA required that an estimated 32.6 million existing business entities disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network before 2025. The government argued that the law’s function — to crack down on anonymous shell companies and deter money laundering, terrorism financing, and other illicit economic activity—falls within Congress’s regulatory duties.
But the CTA still fails to pass muster, even if anonymous corporate operations can be regulated by Congress because the Constitution’s Commerce Clause can’t be leveraged to compel the disclosure of information for law enforcement purposes, the court’s opinion said.
