We first wrote about the case National Small Business United v. Yellen in March of 2024 (see here). At that time, a federal judge in Alabama ruled that the Corporate Transparency Act (the “CTA”) exceeded the Constitution’s limits on the legislative branch and was therefore unconstitutional. That case has been working its way through the federal courts, and on December 16, 2025, the Eleventh Circuit Court of Appeals issued an opinion reversing the lower court and concluding that the Corporate Transparency Act is constitutional.
Despite this ruling, the Financial Crimes Enforcement Network’s (“FinCEN”) interim final rule from March 2025 remains in effect (see here). The effect of that rule was to limit the CTA’s beneficial ownership reporting requirements to entities formed under the law of a foreign country. Entities formed under the law of a U.S. state, territory, or tribe are exempt, and U.S. persons who are beneficial owners of a foreign entity are not required to report their ownership interests.
What does this mean for domestic reporting companies?
Domestic reporting companies do not need to do anything as a result of the Eleventh Circuit’s ruling. FinCEN’s interim final rule remains in effect. However, the FinCEN rule is an administrative policy, and is subject to change at any time. Companies that have gathered information and performed analyses in response to CTA beneficial ownership reporting requirements should preserve this information in the event the filing requirements are reinstated in the future.
State transparency laws still apply.
State-level corporate transparency laws are independent of the CTA and not affected by federal court rulings or administrative actions. Most notably, the New York LLC Transparency Act (the “New York Act”) took effect on January 1, 2026. The New York Act incorporates many definitions from the CTA, including the definition of “reporting company” (although the New York Act only applies to limited liability companies). As a result, FinCEN’s revised definition of “reporting company” is also appliable to the New York Act. This means that the New York Act currently only applies to non-U.S. limited liability companies authorized to do business in the state of New York. Proposed legislation would have broadened the scope of the New York Act to domestic LLCs, but it was vetoed by New York’s governor on December 19, 2025. Like the CTA, the scope of the New York Act could be broadened in the event of a FinCEN rule change or further legislative developments in New York.
