USA: Ping Pong with the Corporate Transparency Act
The paper "Ping Pong with the Corporate Transparency Act" by Herrick Lidstone and Victoria Bantz discusses the turbulent legal and regulatory history of the Corporate Transparency Act (CTA), which was introduced to combat anonymous shell companies by requiring businesses to disclose their Beneficial Ownership Information (BOI).
The paper details the multiple legal challenges to the CTA, particularly regarding its constitutionality, and the back-and-forth rulings from various courts that have alternately blocked and reinstated its enforcement. The National Small Business United v. Yellen case played a pivotal role in questioning whether the CTA exceeds Congress’s constitutional powers, leading to temporary injunctions and appeals that created uncertainty for businesses subject to the law. Additionally, courts have debated whether the CTA violates the Fourth Amendment by compelling businesses to disclose private ownership details without a warrant.
The paper also highlights the executive and legislative responses to the CTA’s uncertain fate. The Department of Treasury and FinCEN (the Financial Crimes Enforcement Network) have adjusted deadlines and enforcement policies, sometimes issuing statements that contradict judicial rulings. Meanwhile, Congress has introduced bills to delay implementation or revise the act, reflecting ongoing bipartisan debates about balancing financial transparency with regulatory burdens on small businesses.
Notably, President Trump’s administration has sent mixed signals—initially opposing the CTA in 2020, but later appealing decisions that blocked its enforcement. The authors conclude that the legal and political “ping pong” surrounding the CTA is far from settled, and businesses should stay informed about evolving requirements while awaiting further litigation and potential legislative changes.