U.S. Court Upholds Constitutionality Of Corporate Transparency Act

As Connecting the Dots readers will recall, over the last several years the Metals Service Center Institute (MSCI) has advocated against implementation of the Corporate Transparency Act (CTA) and to exempt U.S.-based firms from the law.

Unfortunately, on Dec. 16, the U.S. Court of Appeals for the 11th Circuit overturned a lower court ruling that had struck down the CTA. As such, non-U.S. based companies must comply with the CTA.

U.S.-based companies do not have to report. That is because the judges acknowledged an interim rule issued by the Trump administration last year remains in effect. The Trump administration rule exempts domestic companies from the CTA’s reporting requirements while continuing to require certain foreign entities to report beneficial ownership information. As long as that interim regulatory framework remains in place, domestic companies are exempt from the CTA. (As originally written, approved by federal lawmakers, and signed into law by former President Joe Biden, the CTA requires covered entities to report the personal information of their owners and managers to the Financial Crimes Enforcement Network, FinCEN, at the U.S. Treasury Department.)

Regarding this most current ruling: in 2024, a federal district court in Alabama ruled the CTA was unconstitutional and that Congress had gone beyond its statutory authority. In its December 2025 decision, the 11th Circuit disagreed, arguing the CTA satisfies the U.S. Constitution’s international commerce clause. The 11th Circuit also rejected claims that the reporting requirement violates privacy protections. Judges argued the CTA operates like many other routine business reporting rules and noted it contains safeguards that limit who can access reported information and how it may be used. Read more about the CTA and the litigation surrounding it at this link.