On December 16, 2025, the U.S. Court of Appeals for the Eleventh Circuit in National Small Business United v. U.S. Department of the Treasury held that the Corporate Transparency Act (CTA) is constitutional.
Why the CTA Survived
The Eleventh Circuit rejected facial challenges to the CTA under the Interstate Commerce Clause and the Fourth Amendment.
As to the Commerce Clause, the court concluded that the CTA does, in fact, regulate economic activity because it targets how business entities operate after formation and limits anonymous corporate activity. It also held that Congress could rationally find that such activity, in the aggregate, affects interstate commerce, thus justifying Congress’s authority for the law
With respect to the Fourth Amendment claim, the court analogized the CTA to longstanding financial reporting regimes, emphasizing that the statute imposes a uniform, non-discretionary, and limited disclosure obligation with statutory safeguards on access and use of the disclosed information.
Although the decision strengthens the CTA’s legal footing, it does not resolve all constitutional challenges to the statute. The case was a facial challenge only, meaning the plaintiffs had to show the law was invalid in all applications in order to prevail. The court repeatedly emphasized that its ruling does not foreclose future as-applied challenges—such as disputes over the scope of penalties, timing requirements, or the treatment of specific categories of entities that claim the reporting obligations impose disproportionate burdens—or other constitutional theories based on different facts or provisions.
What This Means for Businesses and Counsel
While the Eleventh Circuit evaluated the statute as enacted, FinCEN’s* current interim final rule (IFR) significantly narrows who must report Beneficial Ownership Information (BOI). Under the March 2025 IFR, entities created in the United States are exempt from BOI reporting, updating, and correction. Reporting obligations are largely limited to certain foreign entities registered to do business in the United States.
Importantly, this exemption is regulatory, not statutory, and therefore subject to change. FinCEN has indicated that further rulemaking is expected as litigation stabilizes, meaning future revisions to the IFR or related guidance could quickly shift reporting obligations for domestic companies.
Nonetheless, even where a client is currently exempt, future changes to the implementing regulations and administrative guidance could quickly shift reporting obligations. That is why the Eleventh Circuit’s decision is so important: if the CTA is valid for enforcing current reporting obligations, then it would also sustain expanded obligations for domestic companies if the regulations should change.
Any changes to FinCEN’s reporting requirements, and any successful, as-applied challenges to the CTA, could shift the legal landscape once again and create new uncertainty regarding enforcement scope or the statute’s limits.
Finally, this federal ruling does not affect emerging state‑level entity transparency requirements, which may impose separate disclosure obligations regardless of CTA developments.
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Our Business Law and Business Disputes & Litigation practice groups are monitoring legal developments related to the CTA.
* FinCEN refers to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of Treasury.
