Corporate Transparency Act: Supreme Court Lifts Injunction
PRESS RELEASE
For Immediate Release, January 23, 2025
SCOTUS Lifts One Corporate Transparency Act Injunction
Trump Administration Must Now Act While Litigation Proceeds in the Fifth Circuit
WASHINGTON, DC – In a one paragraph unsigned order today, the Supreme Court temporarily stayed a preliminary injunction issued in December that blocked the enforcement of the Corporate Transparency Act (CTA), while the lawsuit challenging the federal reporting mandate proceeds in the Fifth Circuit Court of Appeals on an expedited basis. The CTA compels more than 32 million small businesses and many nonprofits nationwide to file beneficial ownership reports containing confidential and often sensitive information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) under threat of criminal and civil penalties, including $500 per day fines.
“The Supreme Court’s brief order today does not address the merits of our constitutional challenge to the CTA, and it does not preclude the Fifth Circuit from granting preliminary relief either, subject to further Supreme Court review. We agree with the federal government that this case merits eventual Supreme Court review. While we are disappointed that the trial court’s injunction was stayed pending appeal, it is entirely proper that the Fifth Circuit be given the opportunity to rule first on the constitutionality of the CTA’s unprecedented reporting requirement” said Center for Individual Rights President Todd Gaziano. “We remain confident that the law’s invasive reporting requirements and draconian penalties will be ruled unconstitutional.”
Although the Court’s decision lifts the injunction blocking the enforcement of the CTA in this case, FinCEN is still barred from enforcing the law under a second order issued in January. That second order is not automatically lifted by today’s decision. The ball is now in the Trump administration’s hands to extend or stay the filing deadline and protect millions of neighborhood associations, small businesses, and community organizations from the CTA’s unjustified burden, prevent them from incurring billions of dollars in compliance costs, and give Congress the time it needs to reconsider this mistaken policy.
The law was previously enjoined by a federal district judge in the Eastern District of Texas on December 3, who ruled that the law likely exceeded Congress’ authority under the Constitution’s Commerce Clause. The trial court’s nationwide injunction was later affirmed by a panel of the Fifth Circuit Court of Appeals on December 27. The government then applied to the Supreme Court to lift the injunction on December 31.
The Center for Individual Rights filed Texas Top Cop Shop v. Garland in May 2024. The plaintiffs represent a cross-section of entities that would be affected by the law: Texas Top Cop Shop, a family business in Texas that sells equipment to first-responders, Data Comm for Business, a Texas-based IT firm, Mustardseed Livestock, a small dairy farm in Wyoming, and the Libertarian Party of Mississippi, were all brought together by the threat of the CTA. The suit is also joined by the National Federation of Independent Business, which advocates for nearly 300,000 small business members nationwide.
CIR is representing the plaintiffs in collaboration with Andrew Grossman of BakerHostetler and John C. Sullivan of S|L LAW PLLC.
The Supreme Court’s order can be found here.
About the Center for Individual Rights:
The Center for Individual Rights is a national public interest legal organization that provides free representation to clients whose rights have been violated or are seriously threatened. Celebrating its 35th year, CIR has an impressive record of landmark victories in the Supreme Court of the United States and many other courts, setting legal precedents that restore and protect fundamental individual rights that are necessary for a flourishing and free society.
About our Co-counsel:
Andrew Grossman serves as BakerHostetler’s Appellate and Major Motions team practice leader. He has appeared before the U.S. Supreme Court, nearly all the federal courts of appeals, as well as some state appellate courts, litigating high-profile and complex commercial, administrative and constitutional issues. John Sullivan is a former Assistant Solicitor General for the State of Texas and a veteran attorney, focused on appellate litigation, agency matters, and government relations.
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