Case Update
Case Status: Pending
Federal Reporting Law Threatens Privacy of 32 Million Small Business Owners
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- Congressional Authority
- Federalism
CIR Fights to Restore Injunction on Sweeping Surveillance Program
UPDATE: On December 24, the Fifth Circuit asked the federal government to file a response to CIR’s petition by 12 PM on December 31. The sudden turn around indicates that at least one of the judges has taken a strong interest in the case, and it strongly suggests that they are inclined to take it.
The Center for Individual Rights filed an emergency appeal fighting to restore an injunction that had stopped enforcement of the Corporate Transparency Act, a sweeping surveillance program that mandates tens of millions of small businesses report confidential information to federal law enforcement. On December 3, a District Court issued a nationwide preliminary injunction against the CTA, finding that the law was “likely unconstitutional.” Over one partial dissent, a three-judge panel of the Fifth Circuit stayed that injunction on December 23, restoring the reporting mandate in January 2025. CIR is fighting to restore the injunction to keep the CTA’s sweeping reporting mandate off the books.
On December 3, 2024, a U.S. District Court issued a nationwide preliminary injunction banning the enforcement of the CTA. In a thorough, 80-page opinion, District Judge Amos Mazzant determined that the CTA—which reaches almost every entity registered with a state or tribal authority—amounts to a regulation on the mere anonymous existence of corporate entities. Under Supreme Court precedent, Congress may regulate a corporate entity’s interstate commercial activity, but it may not regulate that entity’s mere existence.
After delaying for eight days, the federal government sought a stay of the injunction in the district court and Fifth Circuit. The Fifth Circuit panel ruling on December 23 stayed the injunction. In response to the confusion that millions of small businesses are experiencing as a result of the government’s appeal, the Treasury Department recently pushed back the CTA filing deadline; the new date is January 13. Even with the pause, the court’s decision to reinstate the CTA leaves businesses with only a very brief window during and shortly after the holiday season to comply with its invasive and burdensome mandates.
CIR is asking the full Fifth Circuit Court to vote to review the erroneous panel decision by January 6. If the Fifth Circuit decides to review the panel ruling, the Court would likely reimpose the injunction until further judicial action is taken. The Fifth Circuit must ensure that Americans are free from an irreparable invasion of their rights while the courts decide the fate of the CTA.