Posted
Tuesday, May 21, 2024
Attorney General Hilgers joined a coalition of 22 states in filing an amicus brief opposing a federal disclosure regime that would burden small businesses.
The brief, filed in the United States Court of Appeals for the Eleventh Circuit, supports plaintiffs who challenged the Corporate Transparency Act (CTA). The CTA, enacted in 2021, requires the disclosure of ownership interests in qualifying business entities to the federal government.
This Act was designed to combat and prevent financial crimes like money laundering and tax evasion facilitated by shell corporations. However, it would cause several unintended consequences.
The CTA’s new disclosure requirements would not affect large corporations that are exempt. The burden would largely fall on millions of small businesses, including those with fewer than 20 employees, to identify any person who has a “substantial interest” in that business. Information about these persons would be sent to the US Treasury Department’s criminal enforcement arm. Failure to comply is punishable by civil penalties, criminal fines, and up to two years in prison.
The threat of these significant penalties would likely force small businesses in Nebraska and across the country to spend millions of hours and billions of dollars ensuring their compliance with the CTA.
The State’s amicus brief discusses the constitutional right of states to regulate the incorporation of businesses rather than the federal government, which has overstepped its authority. The brief will help ensure Nebraskans are protected from intrusive and unnecessary federal regulation.
