I got this newsletter today which was particularly interesting to me because I do have a small business and I refused to file with the CTA.
January 6, 2025
If you’re looking for an easy example of almost everything wrong with this government, let me introduce Exhibit A:
It started almost exactly a year ago. It was January 2, 2024, and we wrote to you about a new law that had just taken effect called the Corporate Transparency Act, or the CTA.
The CTA was easily one of the dumbest laws I had seen in years… and that’s really saying something.
Don’t forget-- Section 311.2 of Title 9 of the Code of Federal Regulations makes it illegal to sell “carcasses of swine which give off a pronounced sexual odor”… but if the swine gives off a “less than pronounced sexual odor”, it can be used in a meat product.
Yeah. Well, the CTA is more ridiculous than that.
Certain politicians believe that US LLCs and corporations are being used in illegal money laundering activities. Therefore, they came up with the CTA-- which requires business owners to submit a special report to the government that identifies company shareholders.
There are so many reasons why the CTA is idiotic.
First, there are already dozens and dozens of “anti-money laundering” (AML) laws, rules, and regulations on the books. Seriously, it’s an absurd amount. Banks have entire offices full of people who do nothing all day but comply with the countless AML rules.
AML rules are why it feels like getting a colonoscopy just to open up a savings account. Or why it’s so difficult to withdraw a few thousand dollars in cash from the bank.
Even crypto brokerages like Coinbase force their customers to jump through ridiculous hoops-- like sending them a selfie-photo of you holding up your driver’s license-- all in the name of AML compliance.
Well apparently, the existing laws haven’t done a bit of good… because, at least according to the federal government, money laundering is still a huge problem.
So rather than repeal the old, outdated, ineffective AML laws that are already on the books, they added yet another law (the CTA) to the already gargantuan pile.
What makes the CTA especially irritating is that the government already has most of this data. If, for example, you own an LLC registered in one of the fifty states, you likely report that to the IRS on either Schedule C or Form 1065.
So, the government already has the bulk of the information. Yet the CTA demands that law-abiding business owners report nearly the same information, but in a different format, to a separate agency within the Treasury Department.
This is a classic example of what’s wrong with the government: they don’t give a shit about you. They don’t care if they waste your time. They don’t even bother to think through the consequences, the economic impact, the blatant inefficiencies.
And they clearly didn’t spend any time contemplating whether the CTA would solve the money laundering problem.
I mean, seriously, does anyone honestly think that some hardened criminal who is washing illicit funds through a Delaware LLC is going to bother filing a stupid report… or if they do, that the report would genuinely reflect the company’s true beneficial owner?
Were these politicians born yesterday?!?! Talk about a bunch of naive babies. My two-year old would have known better.
The only data the CTA will collect is from honest, hard-working citizens who already provide this information to the IRS. But no one in Congress bothered to think about that… which is pretty much a reflection of how these people do business.
What’s really ironic is that the CTA only hits small and medium sized businesses. Big businesses like Apple, Google, and Bank of America are exempt. So, the same people who claim to be defenders of the little guy passed a law that specifically penalizes small business.
Bizarrely, the government itself claims that “the CTA levels the playing field for tens of millions of law-abiding small businesses across the United States.”
Come again? “Levels the playing field”?? Exactly what sport are these people playing!?! They’re actually trying to sell the CTA as some sort of benefit to small business owners. “Gee aren’t you lucky that you get to file yet another report to the federal government!!!”
The fine print, of course, is that failure to comply with the CTA can result in up to two years in prison.
Now, if you’re going to pass a law that affects “tens of millions of people” and threaten noncompliance with prison time, any decent representative government would at least make efforts to inform people about the law.
Somehow, they came up with a billion dollars for Kamala Harris campaign ads. But where was the nationwide marketing campaign about the CTA? Where was the Super Bowl commercial to ‘raise awareness’ about the compliance requirements?
Didn’t happen. And that is another example of what’s wrong with government: pass an obscure law. Don’t tell anyone about it. Expect people will just find out about it on their own. Threaten them with fines and imprisonment for violating a law that they’ve never heard of.
It’s utterly disgusting. But it reinforces the central theme-- they don’t care about you. They believe that citizens exist to support the government, not the other way around.
Fortunately, a handful of Americans didn’t take the assault lying down… and they filed a lawsuit against the Biden administration.
And on December 3rd, a federal judge in Texas issued a temporary injunction, essentially suspending (for now) the compliance requirement to file the report. Victory for the little guy.
Well Joe Biden wasn’t happy with the outcome. And he couldn’t just leave it alone. So, his administration appealed the injunction to the Fifth Circuit Court of Appeals, and his team was able to get the injunction overturned.
This took place on December 23rd. Given that the original filing deadline was December 31st, Joe Biden apparently had no problem forcing US business owners to spend their holidays filing pointless reports to the federal government.
Fortunately, three days later, a different group of judges within the Fifth Circuit reinstated the injunction, i.e. suspended the filing requirement once again.
But Joe Biden still couldn’t leave it alone. So-- on New Year’s Eve-- Biden’s Solicitor General filed another appeal to the US Supreme Court. What a way to bring in 2025!
So basically, Joe Biden’s team spent the holidays trying to make Americans spend their holidays filling out useless compliance forms.
What an asshole.
Fortunately, as of right now, the injunction is still valid, i.e. there is no requirement to file… and the Supreme Court may simply ignore Joe Biden’s request altogether.
But the whole saga represents another key problem with government: the rules are always changing.
They passed the CTA. They didn’t tell anyone. But there was a requirement to comply. Then the requirement was suspended. Then reinstated. Then suspended again. And now Joe Biden is trying to reinstate it again before he gets flushed down the toilet bowl of history.
How is anyone supposed to keep up with the rules (including the ones which carry fines and imprisonment) if they’re always changing!?
America is full of enormous challenges. But as we have been discussing for quite some time, it’s not hard to understand how to fix them. For starters, stop doing idiotic, destructive things.
And this whole CTA affair is a perfect example of what NOT to do to make the country a much more prosperous place.
It really shouldn’t be hard to move the needle in the right direction. Time will tell... and while optimism is in order, it still absolutely makes sense to have a Plan B.
To your freedom,
James Hickman
Co-Founder, Schiff Sovereign LLC
December 7, 2024
Right at the beginning of the year in early January, I wrote to you about one of the dumbest laws to hit the books in the Land of the Free in a VERY long time. It’s called the Corporate Transparency Act.
The article was called, “Get ready to spend two years in prison,” because, two years in prison is literally the penalty for noncompliance.
You see, the do-gooders in Washington decided that there is too much criminal money laundering taking place in the US banking system. Nevermind that these brainiacs have already passed countless other laws to combat money laundering... all of which seem to be dismal failures.
So they decided to pass yet another anti-money laundering law, which requires every company in America to file a special report to the federal government disclosing the names of its owners.
So if you own a Delaware LLC, for example, to own your family investments, then they wanted you to file this report... even though you ALREADY report the exact same information to the IRS each year.
Well that doesn’t matter. The government wants you to send the same info— but in a different format— to another agency within the Treasury Department. And if you don’t file the report, they threatened everyone with up to two years in prison.
Obviously “ignorance of the law is not an excuse”. They just expect you to keep up with the flood of new laws, plus agency rules, plus court decisions which might modify or nullify all the rules and laws.
Case in point: earlier this week, a VERY sensible federal judge thankfully issued a nationwide injunction on the Corporate Transparency Act, suspending compliance requirements until a final ruling.
This is great news; it means that, at least for now, you do not have to comply with the CTA. But it also illustrates how quickly the laws change. Like literally every single day.
It’s practically a full-time job to keep up with all the changes... and it’s virtually impossible to have a functioning society when the rules are so fluid.
This is the topic of this weekend’s podcast— we hope you enjoy and look forward to speaking with you again next week.
To your freedom,
James Hickman
Co-Founder, Schiff Sovereign LLC
