South Carolina Attorney General Alan Wilson co-led a 25-state brief filed in federal court to protect small businesses and uphold states’ authority to regulate the formation of corporations.
The brief asks the 5th Circuit Court of Appeals to uphold a lower court’s ruling that the Corporate Transparency Act is unconstitutional.
The Corporate Transparency Act, or CTA, would require businesses with 20 or fewer employees to report personal identifying information about their “beneficial owners” to the U.S. Department of the Treasury’s criminal enforcement bureau. A “beneficial owner” is someone who either exercises substantial control over the business or owns or controls 25 percent or more of its ownership interest.
It’s estimated that in just the first two years of the CTA, small businesses nationwide would spend over 150 million hours and nearly $30 billion to comply.
A federal court ruled that the CTA is unconstitutional in March. The Biden-Harris administration has appealed that ruling.
South Carolina, West Virginia, and Kansas are co-leading a brief by 25 states asking the Court of Appeals to agree that the act is unconstitutional and permanently strike it down.
The CTA would burden small businesses and violate states’ authority to regulate corporate formation.
In addition to Attorney General Wilson, West Virginia, and Kansas, the following states joined the brief: Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Virginia, and Wyoming.