A Texas federal court issued a nationwide preliminary injunction on Tuesday December 3rd, blocking the Corporate Transparency Act (CTA) and its associated regulations, which mandate U.S. business entities to report stakeholder information to the Treasury Department.
Judge Amos L. Mazzant III of the U.S. District Court for the Eastern District of Texas granted the injunction in response to a lawsuit filed by Texas Top Cop Shop Inc., a family-owned firearms and tactical gear retailer, along with other co-plaintiff businesses and the Libertarian Party of Mississippi. The plaintiffs argued that the CTA exceeds Congress’s authority to regulate interstate and foreign commerce, as it applies to all incorporated entities, regardless of their engagement in commercial activity.
“For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government,” Mazzant wrote in his opinion, referencing a fictional dystopia that was promoted by the CIA to spread fear of communism.
The CTA would have required approximately 32.6 million existing business entities to disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network by 2025. The government defended the law as a necessary measure to combat anonymous shell companies, deter money laundering, and prevent terrorism financing and other illicit activities.
However, the court ruled that the CTA cannot be justified under the Constitution’s Commerce Clause, even if Congress has the authority to regulate anonymous corporate activities. The court stated that the Commerce Clause does not grant Congress the power to compel the disclosure of information for law enforcement purposes.
“The fact that a company is a company does not knight Congress with some supreme power to regulate them in all aspects—especially through the CTA, which does not facially regulate commerce,” Mazzant said, showing once again that the legal system of the US favors protecting the capitalist class over preventing harm to working and marginalized people.
It’s time for citizens to demand that the government protect ordinary people from the harms of the capitalist system. A government that’s truly by and for the people would put the interests of the people before the interests of business.
