Treasury Aims to Lift Barrier to Corporate Transparency Act

The government appealed an order blocking the enforcement of the Corporate Transparency Act, aiming to remove a final barrier to its enforcement.

The Department of Justice filed notice of appeal of a preliminary injunction put in place Jan. 7 by a judge in the US District Court for the Eastern District of Texas, who said the CTA was likely unconstitutional because it expanded federal power into commerce regulation typically handled by the states.

The order stayed the deadline FiNCEN set for 32 million American businesses to report their beneficial ownership information to Treasury’s Financial Crimes Enforcement Network, or FinCEN. FinCEN has been collecting this information on a voluntary basis, but it would become mandatory if the court rules for the government.

The move comes two weeks after the US Supreme Court stayed an injunction in another case, allowing the act to be enforced before the oral arguments scheduled for March 25 at the US Court of Appeals for the Fifth Circuit. That decision was seen as a sign that, absent intervention by President Donald Trump, the CTA would go into effect before the Fifth Circuit issued an opinion on the matter.

In a statement posted to its website after the appeal, FinCEN said that, if the order is successfully stayed, it will push back its reporting requirements by 30 days to allow companies time to comply. Until then, it won’t enforce the CTA.

“In keeping with Treasury’s commitment to reducing regulatory burden on businesses, FinCEN, during that 30-day period, will assess its options to modify further deadlines or reporting requirements for lower-risk entities, including many U.S. small businesses, while prioritizing reporting for those entities that pose the most significant national security risks,” FinCEN said in the statement.

In the brief supporting the appeal, the Justice Department said it believes it will succeed in defending the constitutionality of the CTA, and also said there’s a tradition of allowing the government to enforce laws even while they are being litigated.

Caleb Kruckenberg, litigation director for the Center for Individual Rights, which is representing plaintiffs in the Fifth Circuit case, said he believed the constitutional questions in the two cases were different enough that the injunction should remain in place. The Supreme Court move was an invitation for the Trump administration to weigh in, he said.

Scott Greytak, an anticorruption attorney and the Director of Advocacy for CTA proponent group Transparency International, said the administration’s moves to continue this case and several others show that it favors the CTA, despite a number of Republican lawmakers lining up to oppose the act.

“It’s exceedingly rare for an administration not to defend a federal law,” Greytak said.

The Texas Public Policy Foundation represents the plaintiffs.

The case is Smith v. Dep’t of the Treasury, E.D. Tex., No. 6:24-cv-00336, notice of appeal 2/5/25.