Supreme Court to Decide Fate of Corporate Transparency Act and BOI Reporting

The U.S. Supreme Court is preparing to weigh in on the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements. This decision follows a contentious legal battle, with federal courts temporarily halting enforcement of the act, leaving small business across the country in limbo.

Currently, the CTA’s enforcement is paused due to a nationwide injunction issued by a federal district court in the Texas Top Cop Shop, Inc. v. Garland case, which is one of the lawsuits asserting that the CTA is not within Congress’s purview to regulate interstate and foreign commerce. The National Federation of Independent Business (NFIB), representing small business interests, has opposed the Justice Department’s request to lift the injunction, arguing that the BOI requirements exceed the authority granted under the Constitution’s commerce clause. The NFIB contended that simply forming a business through state incorporation does not constitute economic activity that justifies federal regulation.

The New Civil Liberties Alliance (NCLA) has further challenged the CTA’s constitutionality, filing an amicus brief urging the Supreme Court to uphold the injunction. The NCLA argued that the CTA’s reporting mandate improperly targets businesses before they engage in commerce, likening this approach to regulatory overreach struck down in past cases, such as the 2012 Affordable Care Act ruling (NFIB v. Sebelius). “These invasive requirements would apply to over 30 million nonprofit and for-profit organizations nationwide, and they apply prior to any commercial transactions or other type of economic activity,” the NCLA stated…

January 15, 2025

---

Originally Published in The Trusted Professional