Lili Martin-Mashburn was recently quoted in Law360 on the Corporate Transparency Act injunction and where the case currently stands with the Supreme Court.
There are cases underway in multiple circuit courts, and there likely will be more to come. In the filings, many claim that the CTA exceeds Congress' powers under the commerce clause. These objections focus on whether the CTA exceeds Congress' authority to regulate interstate commerce, as state law primarily governs corporate formation.
"For the commerce clause to apply, it needs to be clear that those entities are at least having some impact on interstate commerce, if not themselves engaging in interstate commerce right now," Martin-Mashburn said. "That is not the case."
District courts in Alabama and Texas that have enjoined the law found that forming a corporate entity triggered its reporting requirements and that "the act of forming an entity itself, on its face, is not enough to be interstate commerce," Martin-Mashburn said. Instead, the law "just sweeps up every entity that is formed" after Jan. 1, 2024, even in cases where the individuals who formed an entity decide to dissolve it the next day, she said.
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