President Joe Biden’s administration has called on the Supreme Court to reinstate a controversial law targetting small businesses.
The law required millions of small businesses to report personal information to the federal government to supposedly prevent money laundering.
The Corporate Transparency Act requires businesses with less than 20 employees to report personal information about their owners to the Treasury Department’s Financial Crimes Enforcement Network.
The penalties for violating the reporting requirements are draconian.
Business owners who fail to comply could face two years in prison and $10,000 in fines.
Information that must be submitted includes owners’ names, home addresses, and photo IDs.
The government has defended the law as a powerful tool to combat bad actors who operate using shell companies.
But the law’s sweeping scope is set to impact millions of perfectly legitimate small businesses just trying to get by.
A federal district court struck the law down in early December, finding the law stretched the government’s power to regulate commerce.
However, continued legal developments have left business owners in limbo.
The Biden admin petitioned the Supreme Court Tuesday to allow the law to be enforced while an appeal plays out.
In a written application, Solicitor General Elizabeth Prelogar said the reporting requirements “fall comfortably within Congress’s authority under the Commerce Clause to regulate economic activities (here, the anonymous operation of business entities) that substantially affect interstate commerce.”
The Justice Department also asked the Supreme Court to limit the scope of the lower court’s universal injunction.
The administration said the case presents an opportunity to address the propriety of universal injunctions, which prevent laws from being enforced nationwide.
Small businesses were facing an initial deadline of January 1, 2025, to report their information, which was pushed back to January 13.
The law is currently on hold ahead of oral arguments before the Fifth Circuit on March 25, 2025.
The law’s challengers have asked for more time to educate the millions of Americans who will be impacted by its severe requirements.
In a December 24 letter to Treasury Secretary Janet Yellen, Mark Eisele, president of the National Cattlemen’s Beef Association, wrote:
“We are greatly concerned that a mere two-week extension does not provide enough time for millions of American businesses to comply with the law.
“At minimum, we request Treasury provide a one-year delay to allow for greater education and outreach to small businesses across rural America.”
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