Senator Tuberville and Congressman Davidson:
On behalf of tens of millions of small businesses, the undersigned organizations strongly support your legislation to repeal the Corporate Transparency Act (CTA), an unconstitutional expansion of the federal government that targets over 32 million small businesses..
The CTA was signed into law as part of the 2021 National Defense Authorization Act.1 By passing this law, Congress imposed one of the most expansive small business regulations in history as an amendment to an unrelated and must-pass bill.
The law's intent was to fight money laundering and shell companies. Unfortunately, criminals will not comply with this law or file their beneficial ownership information with the federal government. However, law-abiding small business owners will. Small businesses fear that all the CTA has done is impose tens of billions of dollars in compliance costs on their businesses and will not stop the criminal activity it was intended to target.
Thankfully, on December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide injunction, blocking the enforcement of the CTA. Without this ruling, over 20 million small businesses could face up to a $10,000 fine and 2 years in prison for not complying with a law they largely do not know exists. In fact, according to research from the National Federation of Independent Business (NFIB), 83% of small businesses do not know of the CTA or the requirements stemming from the law.
Small businesses are not criminals and do not wish to be treated as such by the federal government. We are not opposed to efforts to fight criminal activity, but these efforts must be targeted and tailored. The CTA is not. It is a sledgehammer that imposes exorbitant fines that could close down millions of small businesses forever and penalties that may criminalize tens of millions of law-abiding small business owners.
The Repealing Big Brother Overreach Act would eliminate this unconstitutional power grab by repealing the Corporate Transparency Act. We strongly support this legislation and urge Congress to enact it swiftly to provide relief and certainty to over 32 million small businesses.