Democratic States Sue Trump Administration Over Corporate Reporting Rule

Twenty-one US states and the District of Columbia filed a lawsuit in the US District Court for the District of Oregon on Tuesday against the Trump administration. The coalition, led primarily by Democratic states, seeks to overturn an August rule that exempts US companies and individuals from reporting beneficial ownership information to the Treasury Department.

This rule rolls back requirements established by the 2021 Corporate Transparency Act, which was designed to combat illicit finance. The lawsuit alleges the administration effectively gutted the law by exempting over 99.9% of required companies, which allows owners of shell companies to remain anonymous. New York Attorney General Letitia James joined the coalition in the legal challenge.

Defendants in the case include Scott Bessent, the US Treasury Secretary, as well as the Department of the Treasury, the Financial Crimes Enforcement Network, and the heads of the Departments of Justice and Homeland Security. Secretary Bessent has defended the rule as a way to remove burdensome reporting requirements for law-abiding business owners without compromising national security.