Battling a “quasi-Orwellian” Law

“If this is allowed to stand … I’ll be a
felon, and so will my wife and daughters.”

This grim warning from CIR’s client Tony Goulart to a local newspaper last June describes the fate that could befall not only his family and their small Wyoming farm, but millions of Americans subject to the invasive, illegal Corporate Transparency Act (CTA).

Quietly slipped into a 1,500-page defense appropriations bill in late 2020, purportedly to fight money laundering, the CTA would force more than 32 million businesses to surrender sensitive personal information to the U.S. Treasury Department’s Financial Crimes Enforcement Network. Failure to comply—or even an incomplete report—is punishable by criminal fines of up to $10,000 or even prison.

Our challenge to the CTA, filed a year ago, has ridden a judicial whirlwind since December, and though we forced the government to blink, the battle rages on.

On December 3, Federal District Judge Amos Mazzant issued a nationwide preliminary injunction against the CTA. His monumental 80-page opinion condemned the “quasi-Orwellian” statute and its profound threat to our constitutional system, declaring that it “would require the Court to rubber-stamp what appears to be a substantial expansion of [federal] power.”

In the dizzying legal battle that followed, a desperate government secured reversal of the injunction from a Fifth Circuit Court of Appeals motions panel two days before Christmas. We sought full court review on Christmas Eve, and a merits panel on the same court restored the injunction three days later. Government lawyers then filed an emergency motion in the Supreme Court on New Year’s Eve—after sunset!

And so the briefing continued in the High Court in early January, with 25 states, 15 Members of Congress, and 26 other organizations supporting our cause. Tellingly, not a single person or entity filed in support of the feds or the CTA! Although the Court majority temporarily lifted the injunction in January in a one-paragraph order (without addressing the substance of our case), the justices knew the appellate court had expedited its appeal and the case might return to the Supreme Court after further proceedings. At that stage, Treasury bureaucrats set a new CTA reporting deadline for March.

Our relentless filings over the next two months, plus policy arguments from our clients and others, helped further extend that deadline. On March 21, the feds issued an interim final rule exempting all domestic entities from the CTA’s onerous requirements—at least until January 1, 2026.

This remarkable concession reveals the hollowness of the government’s prior claims. After insisting to the Supreme Court that a delay of even a few weeks in the CTA’s implementation would imperil national security, Treasury now admits that domestic businesses pose such negligible concerns that it can exempt 99.8% of all originally targeted entities.

Although this initial victory provides critical breathing room, our fight is far from over. Treasury is accepting public comments on the “interim” rule and promises to replace it by 2026. It’s unclear what parts of the CTA this administration will embrace in eight months, but we’ll have no security against future administrations’ abuses unless the law is definitively struck down.

Meanwhile, in the ongoing appellate battle, the Fifth Circuit asked for two additional rounds of briefing from each side after the normal briefing was complete. Even the federal government concedes our case is not moot simply because the reporting deadline has been extended. In our April 8 filing, we also reminded the appellate panel that it is the law itself, not its implementation date, that exceeds Congress’ authority and violates citizens’ First Amendment free association rights and Fourth Amendment protection against warrantless searches. Those threats to our clients—and millions of Americans—still loom.

The unprecedented coalition supporting CIR’s litigation knows that the CTA’s threat to liberty remains real—and no amount of bureaucratic maneuvering will derail us from reaffirming that the government wields only the limited powers we the people have given it. The CTA’s illegal reporting scheme is not among them.

As Tony recently stated on social media, this law “needs to have a wooden stake driven through its heart.” With legal hammer in hand, we will secure the CTA’s permanent demise and stake our claim on freedom.