On December 16, 2025, the U.S. Court of Appeals for the Eleventh Circuit issued a significant decision in National Small Business United v. U.S. Department of the Treasury, No. 24-10736, 2025 WL 3637295 (11th Cir. Dec. 16, 2025), ruling that the controversial Corporate Transparency Act (“CTA”), 31 U.S.C. § 5336, is constitutional.
By way of background, the CTA requires corporations, limited-liability companies and other business entities to submit information – including their legal and trade names, their principal places of business and the identity of “beneficial owners” – to the Financial Crimes Enforcement Network (“FinCEN”), the criminal enforcement arm of the U.S. Department of the Treasury. The CTA primarily applies to small businesses.
The plaintiffs in National Small Business United, a business association and a small business owner, sued the federal government on the basis that the CTA was unconstitutional. The Northern District of Alabama agreed, granting summary judgment to the plaintiffs and permanently enjoining the federal government from enforcing the CTA against the plaintiffs.
The Eleventh Circuit, however, reversed the lower court’s decision and found that Congress acted within its powers under the Commerce Clause in enacting the CTA. The Court reasoned that the CTA, on its face, regulates activity that is economic in nature because the entities it applies to “are commercial by their very nature.” Further, Congress rationally concluded that the regulated activity “has a substantial aggregate effect on interstate commerce” and that the CTA’s reporting requirements would help prevent financial crime.
In addition, the Court rejected the plaintiffs’ argument that the CTA violates the Fourth Amendment, finding that the CTA’s data collection was not an unreasonable search or seizure. The Court noted that other federal laws requiring businesses to report certain information (such as banking regulations) have withstood similar Fourth Amendment challenges.
The Court remanded the case to the Northern District of Alabama for further proceedings. Accordingly, at this time, the CTA is constitutional. However, the National Small Business United decision has limited practical impact due to an Interim Final Rule issued by the Treasury Department in March 2025. That Rule exempts all domestic companies from the CTA’s reporting requirements. Under the Rule, only “foreign entities” are subject to these requirements.
Because National Small Business United did not invalidate this Rule, domestic companies will not need to submit any information to FinCEN, for now. However, there is still significant uncertainty surrounding the legality of the CTA, and its constitutionality is likely to be addressed by the Supreme Court in the near future. We will be closely monitoring all judicial and governmental developments related to the CTA and will periodically provide updates on our website.
For more information about how the CTA and this ruling may impact your business, call us at 412-533-3279 or email wlabovitz@labolawgroup.com or jhosa@labolawgroup.com to schedule a free, no-obligation consultation. For more information, visit the firm’s website at labolawgroup.com.
