Small businesses have long been the backbone of the American economy, driving innovation, creating jobs, and sustaining communities nationwide. Yet, a sweeping federal law—the Corporate Transparency Act (CTA)—threatens their ability to thrive while raising serious constitutional concerns.
Among those speaking out against this overreach is the National Association of Wholesaler-Distributors (NAW), a trade group representing over 35,000 companies operating at approximately 150,000 locations across the country. NAW’s members, spanning 19 distinct trade sectors, are predominantly small to medium-sized, closely held businesses that form the economic backbone of their communities. These businesses provide essential goods and services while fueling local economies, but the CTA’s intrusive requirements threaten their operations and security. The Job Creators Network Foundation (JCNF), a 501(c)(3) nonpartisan organization founded by entrepreneurs committed to educating employees of Main Street America, joined the brief.
Mountain States Legal Foundation has joined the fight to protect these businesses and the principles at stake by filing an amicus brief in Texas Top Cop Shop, Inc. v. Garland. This case challenges the CTA, arguing that it not only imposes undue burdens on small businesses but also violates fundamental constitutional protections.
The CTA mandates that small businesses report detailed ownership information to the federal government via the Financial Crimes Enforcement Network (FinCEN), a bureau under the Department of the Treasury. Traditionally, business registration and oversight have been the responsibility of individual states. The CTA shifts this power to the federal level, creating a one-size-fits-all mandate that disproportionately impacts small businesses.
For many small businesses, the CTA’s requirements are more than bureaucratic red tape—they are an existential threat. Compliance costs alone range from $85 to over $2,600 just to determine if a business is subject to the law. Beyond that, businesses must continually update their filings, diverting valuable resources from growth and innovation. Failure to comply, even unintentionally, can result in criminal penalties.
Equally concerning are the privacy risks. The CTA forces businesses to disclose sensitive personal information about their owners, exposing them to potential data breaches and misuse. This is particularly alarming for companies involved in politically sensitive or expressive activities, where disclosure could lead to harassment or other chilling effects on free association. Even more concerning is the fact that the Director of FinCEN admitted that the agency has no way of verifying the accuracy of any of the reported information, rendering the privacy intrusion largely pointless.
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Since 1977, MSLF has fought to protect private property rights, individual liberties, and economic freedom. MSLF is a nonprofit public interest legal foundation. We represent clients pro bono and receive no government funding. Make your 100% tax deductible contribution today and join the fight.
What’s at Stake?
The stakes of this case extend far beyond small businesses. The CTA is being challenged on several constitutional grounds, including its overreach under the Commerce Clause, Fourth Amendment privacy rights violations, and infringement on First Amendment freedoms of association. The law also encroaches on state authority, disrupting the balance of power between state and federal governments that underpins the American legal system.
By stepping into this fight, Mountain States aims to uphold the district court’s injunction against enforcing the CTA, protect small businesses from unconstitutional burdens, and preserve foundational constitutional principles. Through its amicus brief, Mountain States stands alongside NAW and countless small businesses, ensuring their voices are heard in a fight that could determine the limits of federal power and the future of individual rights in the United States.
January 2025 Update:
In our second amicus brief, we ask the U.S. Supreme Court to keep intact the injunction that prevents the federal government from implementing the reporting requirements under the Corporate Transparency Act (CTA) and its corresponding Reporting Rule, which impose confusing and invasive reporting requirements on small-to-medium-sized businesses. The district court previously decided that these reporting requirements are likely unconstitutional, and issued an injunction to make sure the federal government could not enforce them until the court had a full chance to assess their validity. The government asked the Fifth Circuit Court of Appeals to get rid of the injunction; and the Court of Appeals originally agreed to do that, and then quickly changed its mind. The government then sought emergency relief from the U.S. Supreme Court, so that it could start enforcing the reporting requirements right away even though the lower courts have not yet made final determinations whether the requirements are consistent with the U.S. Constitution.
And that’s where this case sits today: in front of the Supreme Court as a so-called “emergency.” If the Supreme Court grants the government’s application for a stay of the district court’s injunction, meaning that the Supreme Court would allow implementation of the reporting requirements even though the lower courts have not actually decided their validity yet, then millions of businesses would immediately face these burdensome requirements, risking severe civil and criminal penalties for noncompliance before the Act’s validity is conclusively determined.
The CTA disproportionately impacts small-to-medium-sized businesses, forcing them to navigate unclear compliance obligations at the expense of confidentiality, or risk enterprise-crippling civil and potentially even criminal penalties. Organizations like the National Association of Wholesaler-Distributors and Job Creators Network Foundation, representing thousands of companies and millions of workers nationwide, emphasize that the CTA’s reporting mandates would unfairly transform unsuspecting entrepreneurs into criminals. By denying the application for a stay, the Supreme Court can prevent irreversible harm, safeguarding businesses from unconstitutional and unjust interference while federal courts conclusively determine whether the reporting requirements in the CTA are constitutional in the first place.
Case Timeline
- December 2024: MSLF files amicus brief in US Court of Appeals for the Fifth Circuit representing NAW and JCNF asking to keep the injunction in place against the implementation of the federal Corporate Transparency Act.
- January 2025: MSLF files amicus brief in the Supreme Court of the United States again representing NAW and JCNF to deny the application of stay of the injunction.
- March 2025: MSLF files an amicus brief in the US Court of Appeals for the Fifth Circuit representing NAW and JCNF, asking the court to affirm the district court’s preliminary injunction.
