Miller Johnson files lawsuit challenging the constitutionality of the federal Corporate Transparency Act (CTA).

On March 26, 2024, Miller Johnson filed a lawsuit challenging the constitutionality of the federal Corporate Transparency Act (CTA). Miller Johnson represents the Small Business Association of Michigan, the Chaldean Chamber of Commerce, Steward Media Group, LLC, Power Connections Co, LLC, Derek Dickow, Semper Real Estate Advisors, LLC, and Timothy Eisenbraun.

The CTA is a sweeping, invasive, and confusing criminal law enforcement statute that burdens millions of small businesses—and subjects law-abiding Americans to potential criminal penalties in violation of the United States Constitution.

The CTA requires small businesses to disclose sensitive personal information about their owners to the federal government. This burden is placed on the smallest of small businesses—companies with less than $5 million in annual revenue. Medium and large businesses are exempt, as are banks and insurance companies.

The CTA also requires small businesses to report the personal information of anyone who helps form the business.  According to the government, even  the mailroom employee who physically delivers documents must comply. If a small business fails to comply, the consequences can be severe. Any person who willfully fails to report the required information can face prison time.

The cost of complying with the CTA’s vague and convoluted reporting requirements and regulation is substantial. The government’s own estimates predict that the cost of compliance for 2024 alone will reach $27.1 billion.

The CTA violates the constitutional rights of millions of law-abiding Americans and American businesses. The CTA exceeds Congress’s authority, violates the Constitution’s prohibition on unreasonable searches and seizures, and is unconstitutionally vague.

Small businesses are a vital part of Michigan’s economy. Miller Johnson is proud to represent the Small Business Association of Michigan, the Chaldean Chamber of Commerce, and their members in this challenge to the CTA’s costly, confusing, and unconstitutional requirements.

If you have any questions contact any of the authors or any member of our CTA Taskforce. To learn more about CTA visit this client alert.