The Corporate Transparency Act reporting provision was blocked by the Fifth Circuit on Dec. 26 while the litigation works its way through the lower courts.
The Department of Justice (DOJ) asked the U.S. Supreme Court on Dec. 31, 2024, for an emergency order resurrecting a federal anti-money laundering law that lower courts blocked weeks earlier.
The statute, known as the federal Corporate Transparency Act (CTA), required millions of business entities to file information returns about their owners by Jan. 1, 2025.
The law stipulates that affected corporate entities must file reports with the federal government about their beneficial owners, which means individuals with substantial control over the entity or who own or control 25 percent of the entity. Entities were required to provide the government with the names of their beneficial owners, along with their birthdates, addresses, and identifying information such as passport or driver’s license numbers.
The CTA’s reporting requirement was put on hold on Dec. 5, 2024, when the U.S. District Court for the Eastern District of Texas sided with the challengers, granting a nationwide preliminary injunction against the CTA. The court found that the challengers would likely succeed with their claim that the act was unconstitutional.
On Dec. 13, 2024, the DOJ, acting on behalf of the Financial Crimes Enforcement Network (FinCEN), a federal agency, asked the U.S. Court of Appeals for the Fifth Circuit to stay the injunction. The agency argued the law was constitutional and that the challenge to it would probably fail in the end.
The circuit court’s motions panel granted the government’s request on Dec. 23, 2024, and blocked the injunction pending appeal. FinCEN then extended the filing deadline for corporate entities to Jan. 13, 2025.
On Dec. 26, 2024, the circuit court performed an about-face and assigned the case to its merits panel and restored the injunction to “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”
The next day the circuit court scheduled oral argument in the case for March 25, 2025.
The new emergency application was filed with Justice Samuel Alito, who oversees urgent appeals from the Fifth Circuit.
It is unclear when the Supreme Court will act on the application.
U.S. Solicitor General Elizabeth Prelogar argued in the application that the Supreme Court should lift the district court’s injunction, or at least narrow it.
The CTA’s reporting mandates “are important to the government in preventing, detecting, and prosecuting crimes such as money laundering, tax fraud, and the financing of terrorism.”
The law’s requirements are well within congressional authority, she wrote.
Prelogar wrote that in 2024, two other federal district courts “denied preliminary injunction motions raising substantially similar constitutional claims,” and a third denied an injunction because the plaintiffs had failed to demonstrate that the continued operation of the law would cause harm.
Prelogar wrote that although a fourth federal district court found the CTA violates the Constitution, the injunction it issued was not nationwide in effect and covered only the parties that brought the lawsuit. That ruling is under appeal in the U.S. Court of Appeals for the Eleventh Circuit.
Not allowing the government to enforce the CTA “impedes efforts to prevent financial crime and protect national security,” she added.
The Epoch Times reached out for comment to the DOJ and the challengers’ attorneys, Christian Clase and Caleb Kruckenberg of the Center for Individual Rights in Washington.
No replies were received by publication time.
Tom Ozimek contributed to this report.
