
South Carolina Attorney General Co-Leads Multi-State Effort to Block Corporate Transparency Act, Citing Harm to Small Businesses
COLUMBIA, S.C. — South Carolina Attorney General Alan Wilson is co-leading a coalition of 25 Republican-led states in urging the U.S. Supreme Court to maintain a nationwide pause on the enforcement of the Corporate Transparency Act (CTA), citing concerns about its impact on small businesses and state sovereignty. The group filed an amicus brief on Thursday ahead of a deadline set by Justice Samuel Alito for the Biden administration’s response to their request.
The Corporate Transparency Act, aimed at curbing money laundering and tax evasion through anonymous shell companies, would require more than 32 million U.S. businesses—many with 20 or fewer employees—to file reports with the Financial Crimes Enforcement Network (FinCEN) listing their “beneficial owners.” A beneficial owner is defined as someone who exercises substantial control over the business or holds at least a 25% ownership interest. However, critics, including Wilson, argue that the law unfairly burdens small businesses and infringes on states’ authority to regulate corporate formation.
“Right before Christmas, the federal government is acting like Ebenezer Scrooge by trying to squeeze billions of dollars out of small businesses,” Wilson said. “It’s another example of the Biden-Harris administration trying to do something they don’t have the power to do and would hurt the economy.”

Significant Costs and State Concerns
According to FinCEN, businesses would spend an estimated 150 million hours and $30 billion in compliance costs during the first two years of the CTA’s enforcement. The AGs’ brief disputes this estimate, calling it “far too low” and noting that states themselves would incur substantial costs in educating the public and assisting businesses in meeting the new reporting requirements.
“This law takes an unprecedented swipe at state-controlled corporate law, and the costs will be staggering for both states and small businesses,” the brief stated. Wilson and other state leaders argue that requiring businesses to report ownership information at the time of incorporation means regulating entities before they engage in any commerce, thus rendering the federal government’s justification under the Commerce Clause invalid.
In South Carolina, where small businesses are a vital part of the economy, Wilson highlighted that the CTA’s reporting requirements could deter entrepreneurs and stifle economic growth. “The federal government is overstepping its bounds, and this will only hurt local economies,” Wilson said.
A Broader Legal Battle
The current legal dispute stems from a lawsuit brought by Texas-based firearms retailer Texas Top Cop Shop Inc. A federal judge in Texas initially issued a nationwide injunction blocking the CTA’s enforcement, but that decision was later overturned by the U.S. Court of Appeals for the Fifth Circuit. A separate Fifth Circuit panel then paused the enforcement again, leading to ongoing litigation over the law’s constitutionality.
South Carolina, West Virginia, and Kansas are spearheading efforts to protect states’ rights and ensure that corporate regulation remains a state-controlled issue. The brief was joined by attorneys general from Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Virginia, and Wyoming.
The coalition’s filing is the latest chapter in a growing legal battle between Republican-led states and the federal government over regulatory authority. If the CTA is ultimately upheld, Wilson warns that small businesses in South Carolina and beyond will bear the brunt of the law’s onerous requirements.
What Lies Ahead for Business Owners
The legal back-and-forth has created significant confusion for the millions of small business owners who are expected to comply with the CTA’s reporting requirements. Following months of preparation for the Jan. 1, 2025, deadline, many felt temporary relief when a preliminary injunction was issued on Dec. 3. However, that relief was short-lived, as a stay order on Dec. 23 reactivated the reporting requirements—only for another court order on Dec. 26 to reverse course yet again. With over 32 million businesses potentially impacted by the CTA, the on-again, off-again nature of these rulings has left many frustrated and uncertain about next steps.
Moving forward, the U.S. Supreme Court could take several approaches. It may decide not to intervene and let the case continue in the Fifth Circuit, prolonging uncertainty for business owners. If the Fifth Circuit overturns the district court’s ruling, the injunction would be lifted, allowing the CTA to go into effect while litigation continues. Conversely, if the Fifth Circuit upholds the injunction, the government may appeal that ruling, providing the Supreme Court with another opportunity to weigh in on the matter. Historically, the Court has shown restraint in cases like these, opting to allow appellate courts to fully deliberate before stepping in.
However, if the Supreme Court chooses to act swiftly, it could provide immediate clarity by addressing the government’s request for a stay. Such action would temporarily resolve the legal confusion and help restore order to the CTA’s implementation process while broader constitutional questions remain under review. Business owners and legal experts alike await the Court’s decision, which could significantly impact compliance obligations across the country.
Stay with CC News Network for updates on this developing story.
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