Background
The Corporate Transparency Act (“CTA”) was enacted in 2021 and was designed to combat illicit finance and the misuse of shell companies by requiring certain entities to file reports and disclose beneficial ownership information (“BOI”) to the Financial Crimes Enforcement Network (“FinCEN”), which is part of the United States Treasury Department. Generally (and except as discussed below with regard to FinCEN’s March 2025 interim rule), the CTA applies to virtually all corporations, limited liability companies, and similar entities formed or registered to do business in the United States, subject to specific exemptions.
In March 2024, the U.S. District Court for the Northern District of Alabama ruled the CTA unconstitutional in National Small Business United v. Treasury, finding that Congress lacked authority under the Commerce Clause of the United States Constitution to impose these reporting requirements. That decision created significant uncertainty for businesses regarding compliance obligations.
The Eleventh Circuit’s Decision
On December 16, 2025, the Eleventh Circuit reversed the Alabama district court and upheld the CTA as constitutional. The appellate court concluded that the CTA falls within Congress’s power under the Commerce Clause because it regulates entities engaged in economic activity and addresses matters that substantially affect interstate commerce. The court also rejected Fourth Amendment challenges, finding that the CTA’s reporting requirements constitute a uniform, non-discretionary regulatory obligation rather than an unreasonable search.
Current Compliance Landscape
Despite the Eleventh Circuit’s recent decision, a March 2025 interim rule from FinCEN remains in effect. Under that rule, domestic reporting companies are currently exempt from BOI reporting obligations, while foreign entities registered to do business in the United States must continue to comply.
These exemptions reflect administrative policy choices, not constitutional requirements, and may be revisited by FinCEN at any time. However, at this time, it continues to be the case that domestically formed companies do not have to comply with CTA reporting requirements.
What This Means for Your Business
- The CTA is valid law: The Eleventh Circuit has confirmed its constitutionality, and compliance obligations could be reinstated for domestic entities at any time.
- Foreign entities must comply; domestic companies do not: Non-U.S. entities registered in the United States remain subject to BOI reporting requirements. However, domestic companies formed in the United States remain exempt from reporting requirements under the CTA for the time being.
- Prepare for potential changes: FinCEN may revise or rescind the current exemptions. Businesses should maintain readiness to comply promptly if reporting obligations resume.
- Monitor developments: Further litigation or rulemaking could impact timelines and requirements. Clients should consider conducting an internal review of entity structures and beneficial ownership information and establishing processes to collect and maintain BOI in case reporting obligations change again in the future.
Please feel free to reach out to me or one of the attorneys on our Business Team at (336) 379-8651 if you have any questions or would like help understanding how the Corporate Transparency Act may affect your business. We will continue to monitor developments and may share updates on our website as guidance evolves. Because CTA requirements can change quickly, we also encourage clients to stay informed through reliable news and government sources, as we may not be able to individually notify all current and former clients if reporting obligations change again in the future.
About the Author
Brandon Jones focuses his practice on helping individuals and business owners in a number of capacities. A significant portion of Brandon’s practice consists of assisting small business owners and entrepreneurs with all aspects of ownership and operation, including business formation, management, contract drafting and negotiation, business succession planning, and mergers and acquisitions. Brandon enjoys working with clients from a diverse variety of industries and helping them successfully navigate the legal and business landscape. Brandon can be reached at 336-478-1160 or bkj@crlaw.com.