The Supreme Court has taken action to reinstate a requirement for millions of small business owners to register with a division of the Treasury Department focused on combating money laundering and various financial offenses.
This decision follows an emergency request from the Justice Department towards the end of the Biden administration, aimed at enabling the enforcement of the Corporate Transparency Act. This law, which was put into place in 2021, is intended to address the misuse of anonymous shell companies.
Approximately 32.6 million small business owners, including part-owners, are required to submit personal details to the Financial Crimes Enforcement Network, known as FinCEN. The information demanded includes photo identification and residential addresses.
It remains uncertain how the Trump administration will approach the enforcement of this registration mandate, which has faced opposition from several Republican-led states, lawmakers, as well as groups representing conservative business interests.
Previously, a federal judge in Texas had halted the enforcement of the registration requirement, ruling that Congress did not have the authority to enact the corporate transparency law. This decision was pending a review by a panel from the 5th U.S. Circuit Court of Appeals, creating an extended delay in its enforcement.
With the Supreme Court’s recent ruling, the requirement to register is now back in effect while the legal case in Texas continues its process through the court system.
The National Small Business Association, which has previously contested the reporting requirements through legal channels, has urged FinCEN to provide sufficient time for businesses to comply with the new regulations.
NSBA President and CEO Todd McCracken expressed concerns over the implications of the ruling, stating, “This decision creates even more uncertainty for the millions of small businesses we represent. I cannot stress enough what a major problem this back-and-forth is and the massive uncertainty it creates for businesses across the country.” He underscored the need for Congress to postpone and repeal the Corporate Transparency Act.
Similarly, Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, indicated that this ruling is unlikely to mark the conclusion of the ongoing saga surrounding the reporting requirement.
“With the cloud of uncertainty still lingering over the CTA’s legal status, we urge President Trump to intervene and provide instant relief for businesses that fail to meet the deadlines, as there are likely millions affected,” she stated. “The CTA’s confusion continues, and Congress needs to step in to repeal this mandate.”
On the other hand, a coalition of labor, environmental, and progressive organizations supporting the law has commended the court’s decision to enable enforcement.
Ian Gary, executive director of the FACT Coalition, remarked, “For years, law enforcement has struggled to address the influx of illicit money linked to often violent crimes, but that effort is hindered by the existence of shell companies and secrecy. Today’s order emphasizes the urgency of tracing financial flows so that law enforcement can target the criminals who misuse the system.”
