Corporate Transparency Act Turmoil: Supreme Court Weighs Emergency Stay

Last Updated: January 8, 2025

Overview

In the final hours of 2024, the government filed an emergency application with the U.S. Supreme Court to stay (i.e., put on hold) a nationwide preliminary injunction against the Corporate Transparency Act (CTA), its reporting deadlines, and its enforcement. This injunction arose from a December 3, 2024, ruling by the U.S. District Court for the Eastern District of Texas in the Texas Top Cop Shop case.

On January 3, 2025, Supreme Court Justice Samuel Alito requested that the respondents-plaintiffs submit their response to the government’s application by January 10, 2025. As businesses and individuals await a potential decision, the status of the CTA remains uncertain. Those affected by the CTA should stay vigilant and prepare for the possibility of filing if the injunction is lifted.

Background: The CTA Injunction Saga

Since early December 2024, the CTA’s enforcement and reporting requirements have been in flux. On December 26, 2024, a panel of the Fifth Circuit revived the previously lifted injunction and established an expedited briefing schedule (February 2025) with oral argument set for March 25, 2025. However, just days later, on December 31, 2024, the government submitted an Application for a Stay of the Injunction Issued by the United States District Court for the Eastern District of Texas (the Application) to the Supreme Court.

The government’s Application requests that the Court:

• Stay the nationwide preliminary injunction in full (thus reinstating the CTA’s reporting obligations),
• or, at a minimum, stay the injunction as to nonparties not directly named in the Texas Top Cop Shop case,
• Treat the government’s request as a petition for a writ of certiorari¹ before judgment, to address whether the district court’s preliminary injunction was improperly applied nationwide,
• Issue a continuing or prospective stay of the injunction if the Fifth Circuit upholds any part of it, preserving the government’s right to petition the Supreme Court for further review.

The Government’s Arguments and Legal Basis

The government relies on Rule 23 of the Rules of the Supreme Court and the All Writs Act (28 U.S.C. § 1651) for authority to seek this stay. It notes that “emergency applications usually require the Court to address issues ‘on a short fuse without benefit of full briefing and oral argument.’”² Under the All Writs Act, the Supreme Court may issue any writ necessary to aid its jurisdiction.³

In determining whether to grant a stay, the Court typically requires the applicant to show:

1. A reasonable probability that the Court would grant certiorari,
2. A likelihood of success on the merits, and
3. A likelihood of irreparable harm if the stay is not granted.⁴

Presumption of Constitutionality

The government contends that Acts of Congress generally remain enforceable unless definitively ruled unconstitutional. It further argues that if the Fifth Circuit were to affirm the injunction, Supreme Court review would be likely, given the seriousness of declaring an Act of Congress unconstitutional.

Constitutional Authority

According to the Application, the CTA easily falls within Congress’s powers under the Commerce Clause and the Necessary and Proper Clause. The government stresses that a facial challenge to a statute demands proof that no set of circumstances exists under which the Act would be valid—a high standard seldom met.

Multiple district courts have concluded the CTA is likely constitutional, rejecting preliminary injunction motions on similar grounds.⁵

Irreparable Harm and Equitable Considerations

The government asserts that it would suffer irreparable harm if the CTA remains enjoined. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) invested more than $4.3 million in public outreach, with staff spending thousands of hours on educational efforts. In the weeks before the injunction, roughly one million reports were filed per week—an exponential increase in compliance. Prolonged uncertainty, the government argues, would “squander” these resources, create public confusion, and complicate future reeducation efforts.

Moreover, any delay could undermine U.S. preparedness for the 2025 Financial Action Task Force (FATF) mutual evaluation, potentially weakening the country’s global standing on anti-money-laundering and counter-terrorism financing measures.

What Could Happen Next?

In response to Justice Alito’s directive, the plaintiffs have until January 10, 2025, to submit opposing arguments. A ruling on the stay request might follow soon thereafter—potentially by mid- to late January.

Should the Supreme Court grant the stay, FinCEN may reinstate reporting deadlines, though it might offer extensions to allow businesses time to comply. The expedited schedule in the Fifth Circuit looms just a few weeks later, and the Eleventh Circuit may also rule any day on similar constitutional claims in National Small Business United v. Yellen. Against this backdrop, the legal landscape remains unpredictable, and overlapping cases across multiple jurisdictions could result in conflicting rulings.

Importantly, if a stay is granted before the Fifth Circuit rules, many businesses would be compelled to file their beneficial ownership reports, thereby disclosing personal information. If the CTA were ultimately struck down after compliance, that disclosure could not be undone—raising fairness and privacy concerns for the plaintiffs and similarly situated nonparties.

Legislative Wildcard

Beyond the courtroom, legislative developments add another layer of complexity. Lawmakers previously introduced H.R. 8147, the “Repealing Big Brother Overreach Act,” to repeal the CTA. On January 2, 2025, two congressional representatives authored an op-ed arguing that the CTA invades privacy and violates constitutional rights while burdening small businesses. They urged Congress not to rely solely on the courts to rectify legislative overreach.⁶

Whether Congress will take up the call to repeal or revise the CTA remains to be seen. If legislative momentum grows, it could alter—or even moot—parts of the ongoing litigation.

Analysis and Takeaways

From a practical standpoint, the CTA’s fate is uncertain. On one side, the government emphasizes national security interests, anti-money laundering initiatives, and the significant investments already made to educate the public. On the other side, plaintiffs stress potential constitutional infirmities, the burden on small businesses, and irreversible disclosure of personal data.

This protracted series of court rulings and filings—from the district court, to the Fifth Circuit, and now to the Supreme Court—has led to widespread confusion among Reporting Companies, beneficial owners, and their advisors. Until there is a definitive legal resolution (or legislative intervention), the safest course for those subject to the CTA is to stay informed, monitor how the courts rule on the stay application, and be ready to adapt quickly to any new compliance deadlines.

Footnotes

1. A writ of certiorari is a legal document requesting Supreme Court review of a lower court’s decision. Granting certiorari typically requires at least four justices to vote in favor of review.
2. Application for a Stay of the Injunction Issued by the U.S. District Court for the Eastern District of Texas, p. 12.
3. The request for a stay (called an “application”) outlines the facts and legal arguments for setting aside the district court’s ruling. It is initially referred to a single justice (the “circuit justice”), who may act alone or refer it to the full Court. For more, see SCOTUSblog: Emergency Appeals: Stay Requests.
4. Hollingsworth v. Perry, 558 U.S. 183, 190 (2010) (per curiam).
5. See, e.g., Community Ass’ns Institute v. Yellen, No. 24-cv-1597, 2024 WL 4571412, at *10 (E.D. Va. Oct. 24, 2024); Firestone v. Yellen, No. 24-cv-1034, 2024 WL 4250192, at *14 (D. Or. Sept. 20, 2024). Another court denied an injunction request for lack of irreparable harm. See ECF No. 25, at 50, Small Business Ass’n v. Yellen, No. cv-314 (W.D. Mich. Apr. 29, 2024).
6. The congressional representatives were Rep. Harriet Hageman (R-Wyo.) and Rep. Warren Davidson (R-Ohio). Mr. Davidson is listed as a sponsor of H.R. 8147.