The National Small Business Association urged the Supreme Court to review the Corporate Transparency Act’s (CTA) constitutionality, arguing in a new reply brief that the government is improperly trying to sidestep judicial review through administrative rulemaking. (National Small Business United v. Bessent, No. 25-1201, 9/9/2026)
The CTA, signed into law in 2021, was intended to help law enforcement and regulators uncover layered corporate structures that facilitate illicit activities such as tax evasion, money laundering, and trafficking. However, the CTA and its reporting regulations faced constitutional challenges — and the Treasury Department ultimately excluded U.S. persons and entities from reporting requirements in an August 14, 2026, final rule.
Before Treasury scaled back reporting, the 11th U.S. Circuit Court of Appeals upheld the law in National Small Business United v. Bessent, finding the CTA to be a constitutional exercise of Congress’ power under the Commerce Clause.
In a September 9 brief, NSBA pushes back against the government’s claim that its own administrative actions have made the case irrelevant. Instead, the group contends a definitive ruling is needed to resolve the law’s validity. And NSBA renews its argument that the 11th Circuit’s interpretation of the law represents a vast and unconstitutional expansion of federal power.
Group pushes back on government’s mootness claim
NSBA argues that the 11th Circuit’s reasoning is “profoundly flawed” because it allows Congress to regulate corporate entities “simply because [they] exist” under state law, regardless of their connection to economic activity. This, the brief contends, is a direct contradiction of the Supreme Court’s holding in NFIB v. Sebelius, which rejected theories of federal power based on “prophesied future activity.”
The group also accuses the government of abandoning its original arguments and “ignore[ing] the constitutional elephant in the room.” After contending in the lower court that the CTA was valid because it regulated entities “likely to go on to engage in commercial activity,” NSBA points out that the government dismissed the circuit court’s analysis of this as “irrelevant” in an August 21 brief.
The government has urged the Supreme Court not to take the case, arguing that the recent final rule exempting most domestic companies from the CTA has reduced the case’s “practical significance.”
However, NSBA contends the final regulation’s shift to require only foreign entity reporting is an “implicit admission” that the statute’s domestic application is “indefensible.”
The small business group argues that “Constitutional rights do not depend on — and cannot be mooted by — acts of executive grace.” The government cannot “regulate away the constitutional deficiencies of the CTA itself,” because an agency cannot amend a statute via regulation, it adds.
And leaving the law and the 11th Circuit’s decision in place, the group warns, would give a “green light to any future administration” to rescind the narrowed reporting rule and reimpose the broad statutory reporting mandate.
Fourth Amendment, federalism concerns highlighted
Beyond the Commerce Clause, NSBA argues the CTA’s reporting mandate constitutes an unreasonable search that violates the Fourth Amendment. The law compels millions of small businesses to disclose sensitive personal information to the federal government without a warrant to facilitate “normal ‘law enforcement’ needs,” which NSBA says is a clear constitutional violation.
NSBA also frames the case as “exceptionally important,” noting that 25 states and multiple private groups have filed amicus briefs. NSBA concludes that the CTA “establishes a new high water mark of federal power” that disregards federalism and “tramples Americans’ civil liberties.” It stresses to the Court that the “sensible course” is to grant certiorari and resolve the dispute over the underlying statute, despite the current narrowed reporting regime.
The case has been distributed for the Court’s September 28 conference.
Take your tax and accounting research to the next level with Checkpoint Edge and CoCounsel. Get instant access to AI-assisted research, expert-approved answers, and cutting-edge tools like Advisory Maps and State Charts. Try it today and transform the way you work! Subscribe now and discover a smarter way to find answers.
