Judge Rules in Favor of NSBA in Lawsuit over Corporate Transparency Act

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Mar 04, 2024, 11:25 ET

HUNTSVILLE, Ala., March 4, 2024 /PRNewswire/ -- NSBA applauds the ruling by the U.S. District Court of the Northern District of Alabama to grant summary judgment in NSBA's challenge of the constitutionality of the Corporate Transparency Act (CTA). The ruling by Judge Liles Burke to strike down the CTA is a victory for law-abiding small-business owners everywhere who would have been forced to disclose their sensitive personal information to a government database.

"The CTA has from the very beginning been poor policy that unfairly targets America's small businesses," said McCracken, President and CEO of NSBA. "This ruling justifies the concerns of millions of American businesses about how the CTA is not only a bureaucratic overreach, but a Constitutional infringement."

The challenge to the CTA began in 2022 when the NSBA and Huntsville business owner Isaac Winkles first brought their case before the District Court. While the case was being considered in court, the U.S. Treasury Department's implementation of the CTA has fallen short of expectations - millions of small-business owners still do not know about the requirements of the CTA The database is ripe for data security issues and confusion which could saddle small-business owners with hefty penalties or even jail time.

"As the court noted, the ultimate goals of the CTA, countering money laundering and terrorism financing are laudable," said John Neiman, counsel for the NSBA and Mr. Winkles. "But as the court also noted, the Constitution sets limits on what Congress can do to achieve even the most laudable of goals, and Congress violated those limits here. Congress can find a way to achieve these goals without exceeding the limits on its powers under the Constitution."

"The judge's decision is an opportunity for Congress to go back to the drawing board and find a solution that will truly protect Americans from bad actors," said McCraken. "The CTA simply will not accomplish the goal of stemming money-laundering – what it does is overstep the bounds of privacy, the law, and common sense at the expense of America's small businesses."

Celebrating more than 85 years in operation, NSBA is a staunchly nonpartisan organization advocating on behalf of America's entrepreneurs. NSBA's 65,000 members represent every state and every industry in the U.S. Please visit www.nsba.biz or follow us at @NSBAAdvocate.

SOURCE National Small Business Association