Texas Attorney General Ken Paxton has secured a major victory for small businesses in the US as a federal judge issued a nationwide preliminary injunction against an unconstitutional federal law. The Corporate Transparency Act, which was passed by Congress in 2021, aimed to force entities incorporated under state law to disclose personal information of stakeholders, including address and identification documents, to the Department of the Treasury’s criminal enforcement arm.
The law carried penalties of up to $500,000 and 10 years in jail for noncompliance. However, a federal judge ruled that the Constitution does not give Congress the power to unilaterally regulate the approximately 32.6 million organizations granted formal corporate status by the States.
Attorney General Paxton stated that the law was an “unconstitutional attempt” by the federal government to undermine states’ authority and crush small businesses. He filed an amicus brief in support of Texas small business owners, which led to the nationwide injunction preventing the law from taking effect. The injunction is a major victory for American entrepreneurs, according to Attorney General Paxton.
Source: https://texasattorneygeneral.gov/news/releases/nationwide-injunction-blocks-unconstitutional-law-imposed-massive-costs-small-businesses