Corporate Transparency Act Faces Criticism for High Costs and Constitutional Issues
The Corporate Transparency Act, part of the 2021 National Defense Authorization Act, is under scrutiny for its complexity and alleged unconstitutionality. The Act mandates small businesses to report their 'beneficial owners' to the Treasury Department, aiming to combat money laundering through shell companies. However, the law's vague definition of ownership, which includes anyone with 'substantial control' over a corporation, has led to significant compliance costs estimated at over $1 billion annually. Critics argue that the Act is ineffective, as it imposes new reporting requirements on businesses that already comply with the law, while criminals are likely to circumvent it. A federal district court initially struck down the law as unconstitutional in 2024, but an appellate court reversed this decision in 2025. The law continues to face legal challenges across various districts. 
