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Proposed Corporate Transparency Act Causes More Problems Than It Solves

August 3, 2011

A new article by Reuters, “Shadowy Shell Companies Targeted By US Senate Bill” perpetuates the lie that all shell companies are somehow involved in illicit activity.  The bill itself, S.1483 introduced by Senator Carl Levin of Michigan, is rife with poor assumptions that it will deserve several posts devoted to discussing them.

 

The article refers to shell companies as shadowy.  However, the authors seem to have forgotten that for decades, the U.S. Supreme Court has upheld a right to privacy.  They also ignore the possibility that privacy may be a legitimate concern of a business owner.

 

The article refers back to the original Reuters article,  and reminds readers that they found over 2,000 business registered at a single address in Cheyenne, Wyoming, owned by Wyoming Corporate Services.  However, they neglect to mention that WCS is a licensed commercial registered agent, which is in the business of providing registered agent services for those businesses.  Of course,  there are not 2,000 business all doing business under the same roof.  They simply employ the same registered agent, who also provides mail forwarding and business address services.  Reuters, along with the  promoters of the Corporate Transparency Act, make it seem as  though a business must be a criminal enterprise simply because it wants to do business in a state where it is not located or uses a registered agent which also services hundreds of other companies.

 

This provincial attitude, if fostered, could signal the death of small businesses and interstate commerce.  Do we really want to prohibit businesses from using commercial registered agents?  Do we want to prevent businesses from having office addresses in more than one state unless they have a significant corporate presence and can afford to lease office space?  Are there truly no legitimate reasons for privacy and confidentiality in business?

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