The National Small Business Association (NSBA) is taking its fight against the Corporate Transparency Act (CTA) to the U.S. Supreme Court, calling a circuit court decision upholding the law “a profound threat to federalism and individual liberty.” Meanwhile, the House Financial Services Committee is set to consider a bill to repeal the CTA on Tuesday.
Circuit Court Ruling Challenged
The CTA, enacted in 2021, requires specified entities — including many small businesses — to report personal information about their “beneficial owners” to Treasury’s Financial Crimes Enforcement Network (FinCEN). The law is aimed at layered corporate structures that facilitate money laundering, fraud, trafficking, and other illicit activities.
However, entities subject to the CTA’s reporting rules have brought constitutional challenges in courts around the country. NSBA prevailed at the district court level, with the U.S. District Court for the Northern District of Alabama ruling that the CTA is unconstitutional because Congress exceeded its authority by regulating the “non-commercial act of incorporation.”
However, the 11th U.S. Circuit Court of Appeals — the first circuit court to rule on the matter — reversed in a December 2025 decision (2025 WL 3637295). The appellate court found the law to be a constitutional exercise of Congress’ power to regulate interstate commerce.
In a petition filed on April 15, the NSBA argues that the CTA’s beneficial ownership reporting regime is an unconstitutional overreach of congressional power. It asks the Supreme Court to weigh in on whether Congress exceeded its authority under the Commerce Clause by regulating state-registered corporations “as such,” rather than looking to their commercial activities. The group contends that the 11th Circuit’s decision “transforms the federal government into the superintendent of state-chartered entities by demanding more disclosure than states without regard to whether those state-law entities engage in any commerce.”
The group also seeks Supreme Court review of whether the CTA’s filing requirements constitute “suspicionless and warrantless searches” in violation of the Fourth Amendment. In the NSBA’s view, the beneficial ownership information reporting mandate provides for the assembly of “a massive database of sensitive information for no reason other than to facilitate law enforcement.”
Uncertainty Amid an Enforcement Pause, Repeal Proposal
Despite the 11th Circuit’s ruling upholding the CTA late last year, the vast majority of entities have not had to file beneficial ownership reports. That’s because FinCEN issued an interim final rule in March 2025 that paused CTA enforcement actions against domestic reporting companies and their owners.
However, the NSBA says that while the interim rule provides temporary relief, it also creates a precarious situation for businesses. “The various rulings on the NSBA lawsuit and other similar lawsuits have created massive confusion and left small businesses in a potentially very costly state of limbo,” explained NSBA Chair Bill Belknap. “The 50+ million small businesses in this country desperately need the Supreme Court to intervene and issue a final ruling on this deeply flawed law.”
Meanwhile, some in Congress are pushing to repeal the CTA. The House Financial Services Committee is set to markup one such bill, entitled the Repealing Big Brother Overreach Act, H.R. 425, on Tuesday. Representative Warren Davidson (R-OH) is heading up the legislation, which has 191 Republican cosponsors.
But anti-corruption and law enforcement experts are pushing back against weakening or undoing the CTA.
Repealing the law “would hand a major victory to the networks that threaten U.S. national security, from fentanyl traffickers and human smuggling operations to adversarial regimes,” said Nate Sibley, fellow and director of the Kleptocracy Initiative at the Hudson Institute. “Eliminating this law would make it significantly harder for U.S. authorities to follow the money and disrupt the financial lifelines behind these threats.”
“The Corporate Transparency Act gives law enforcement something we’ve long needed, the ability to identify who is actually behind the companies used to facilitate crimes like human trafficking and money laundering,” added Frank Russo, a CPAC senior advisor and Modern Fortis partner.
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