The Corporate Transparency Act requires the owners of almost all corporations registered in the states to report their personal information to the federal government to be collected in a massive database. As history has shown, large databases of Americans’ personal information, especially those kept by the government, are not secure. What’s worse, the CTA is unconstitutional.
It’s time for the Supreme Court to take up the case challenging it and say so.
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Rarely do the three branches of the federal government agree, and when they all question the validity of the same law, something is probably awry. The executive branch has paused enforcement of the CTA against Americans; members in both chambers of Congress have introduced bills to repeal it; and two district court judges have found the law unconstitutional. Soon, the Supreme Court may take up National Small Businesses United v. Bessent and reiterate that our Constitution establishes a government of enumerated powers.
Though the Constitution’s framers could not have conceived of the “technological terror” of a database such as the CTA, they presciently limited the federal government’s power to protect the people’s liberty. The only massive list collecting the public’s information and behavior that they permitted to be checked twice was perhaps the one in the North Pole.
As well as encroaching on liberty, the CTA and other government lists expose Americans’ sensitive information to hacking and abuse from sinister actors.
In 2018, a hacker breached 60 million records of the U.S. Postal Service, thereby exposing Americans’ email addresses, street addresses, and phone numbers. In 2024, Chinese state-sponsored hackers breached the Department of the Treasury’s computer security guardrails.
In 2016, the public was still reeling from a monthslong hack of a credit reporting agency that exposed the highly sensitive personal information of 143 million people after hackers breached the Electronic Data Gathering, Analysis, and Retrieval system maintained by the Securities and Exchange Commission. EDGAR processes over 1.7 million electronic securities filings annually. Undeterred, the SEC created the similarly vulnerable Consolidated Audit Trail, which unconstitutionally compiles the personal information of Americans who invest in the stock market.
Inexplicably, federal bureaucrats have continued to create lists even though they themselves have been targets. A 2015 breach of the Office of Personnel Management saw the theft of personal information belonging to more than 20 million current and former federal employees.
In 2011, a breach of Tricare exposed the sensitive information, including Social Security numbers, addresses, and health records, of 4.9 million military clinic and hospital patients, exposing the private information of members of our military who have sacrificed so much to keep us safe.
The Constitution was established to protect the people from the abuses of government and the imperfect men who run it, not to empower Big Brother. As such, the Constitution only confers the federal government limited, specifically enumerated powers.
Congress enacted the CTA as part of the much larger National Defense Authorization Act of 2021 that funds the military. As a result, the CTA avoided serious congressional debate or scrutiny when enacted. If the CTA had received proper attention, Members of Congress would likely have noted that money launderers were unlikely to comply with new, strict reporting requirements.
For now, the Trump administration has paused the enforcement of the CTA for most U.S. firms. However, because it did so through an interim final rule from the Department of the Treasury, the next administration could easily resurrect the CTA in its most draconian form.
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Members of all three of the federal government’s branches doubt the CTA’s constitutionality. Whether Congress repeals its mistake or the Supreme Court agrees to take the case, AAF hopes the public will soon be rid of Big Brother’s databases collecting their most sensitive information.
J. Marc Wheat is General Counsel at Advancing American Freedom
