The 5th U.S. Circuit Court of Appeals in New Orleans has temporarily halted enforcement of the Corporate Transparency Act (CTA), which mandates corporate entities to disclose their beneficial owners to the U.S. Treasury Department.
The nationwide injunction, originally issued by Texas District Judge Amos Mazzant on Dec. 3, was reinstated late Thursday after being briefly paused earlier in the week. Judge Mazzant had ruled that the CTA was likely unconstitutional, citing concerns about states’ rights under the Tenth Amendment and describing the law as a “quasi-Orwellian statute.”
The appeals court’s latest order preserves the “constitutional status quo” as arguments about the law’s merits are set to be heard on March 25, 2025.
Implications for Businesses
With the injunction in place, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that companies are no longer required to submit beneficial ownership reports ahead of the January 13 deadline. However, businesses may still voluntarily provide this information.
Background
Enacted in 2021, the CTA aims to combat money laundering by requiring corporations and LLCs to report ownership details to FinCEN. Proponents argue the law addresses the misuse of U.S. entities for illicit financial activities.
The challenge to the law was spearheaded by the National Federation of Independent Business and small businesses represented by the conservative Center for Individual Rights, which raised concerns about government overreach and surveillance.
Key Date:
- March 25, 2025: Oral arguments scheduled in the 5th Circuit to determine the CTA’s constitutionality.
Stay updated on this developing story.
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