New rule could cost small businesses $73.1B over 10 years

A small business advocacy group has launched a legal challenge to new legislative requirements for small business owners that could potentially cost them $73.1 billion over a decade.

The National Federation of Independent Business is requesting a federal court in Texas issue an injunction stopping the reporting requirements in the Corporate Transparency Act from implementation on Jan. 1.

Filed in the U.S. District Court for the Eastern District of Texas, the case is known as Texas Top Cop Shop, Inc., et al. v. Garland, et al. U.S. Attorney General Merrick Garland is named as a defendant in his role for the government. Congress created the act.

This mandate only applies to businesses with over 20 employees and according to documents.

"We are relieved to see the court holding this hearing," said Beth Milito, executive director of NFIB's Small Business Legal Center, in a release.

The National Federation of Independent Business is a nonprofit, nonpartisan advocacy group for key small business issues in Washington and all state capitals.

NIFB says the law would exceed Congress' authority over the states, improperly compel speech and burden associations, and unconstitutionally compel disclosure of private information.

The mandate would require small business owners to register their personal information with the Financial Crimes Enforcement Network.

She continued, "For many of America's small businesses, the beneficial ownership reporting deadline is January 1, 2025. For them, time is of the essence, and they need to know whether they must comply with a reporting requirement that mandates revealing private and personal identifying information. Today, we ask the court to block the Treasury and FinCEN from enforcing the CTA and beneficial ownership requirements until this matter has been fully adjudicated."

NFIB stated that the reporting rule does not follow the law and places an unfair burden on Main Street businesses, which has devastating consequences, with some facing the loss of their business, criminal penalties, and even jail time if they don't register.

The lawsuit was filed with the Texas Top Cop Shop, Data Comm for Business, Mustardseed Livestock, Russell Straayer, and the Libertarian Party of Mississippi.

According to its website, NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.