Groups Allege Transparency Act Violates Fourth, Fifth Amendments

Tax attorney Alan Granwell was quoted in a Tax Notes article about the ongoing legal challenges to the Corporate Transparency Act (CTA). Most recently, the Small Business Association of Michigan (SBA) and other plaintiffs filed a lawsuit in the U.S. District Court for the Western District of Michigan, arguing that the CTA is unconstitutional. The plaintiffs argue that the law violates the Fourth Amendment's protection against unreasonable search and seizure and the Fifth Amendment's due process clause. They also contend that the CTA's definition of "beneficial owner" is unconstitutionally vague. Mr. Granwell acknowledged the vagueness of the "substantial control" test but noted that the government was trying to create a way to identify all individuals who control or own reporting companies.

"It's not surprising the government adopted very expansive provisions to deal with who stands behind a company and ultimately controls it," he said.

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