Amicus Brief: National Small Business United v. Bessent

The Corporate Transparency Act (CTA) is an unprecedented federal law that requires state-chartered corporations to report sensitive information to the federal government. The CTA's requirements are triggered by the act of creating a state-charted corporation, and it can include nonprofit corporations, political organizations, benefit corporations, and more.

The power to create general corporations has been reserved to the states since the Constitution was drafted. In fact, a federal power to create general corporations was proposed at the Constitutional Convention and voted down. There are unique federal corporations, such as Amtrak, but almost every corporation in the country is a creation of state law. The CTA is a novel use of federal power to piggy-back on state law, and it suffers from severe constitutional problems. National Small Business United, a nonprofit corporation that represents small businesses, and two small businesses challenged the act as an unconstitutional expansion of Congress's enumerated powers. The district court agreed, but the Eleventh Circuit overruled and upheld the CTA.

Now on petition to the Supreme Court, the Manhattan Institute has joined Advancing American Freedom, the Americans for Prosperity Foundation, Eagle Forum, and the Liberty and Justice Center on a brief supporting review. We argue that the Constitution is clear: Congress has the power to "regulate commerce . . . among the several states." State incorporation is not an act of commerce, and it certainly isn't commerce "among the several states." Congress is seeking to regulate corporations by what they are rather than what they do. Moreover, the CTA violates core principles of privacy and the Fourth Amendment by requiring the reporting of sensitive corporate information to the government. The Court should review the case and strike down this unconstitutional use of congressional power.

Ilya Shapiro is a senior fellow and director of Constitutional Studies at the Manhattan Institute. Follow him on Twitter here.

Trevor Burrus is a legal policy fellow at the Manhattan Institute.