For most people, the month of December brings holiday preparations and anticipation of the new year. This past December, however, federal courts in the U.S. Court of Appeals for the Fifth Circuit issued a series of back-and-forth orders that left many observers with whiplash. The court orders involved the Corporate Transparency Act, a law that had a looming deadline of Jan. 1, 2025. Before the fireworks rang out on New Year’s Eve, however, the government appealed to the U.S. Supreme Court, seeking what could be a final resolution.

The Corporate Transparency Act

Congress passed the Corporate Transparency Act (CTA) in late 2020 to reduce money laundering and illicit flows of funds by ending the practice of “corporate anonymity.” Prior to the CTA, corporations and limited liability companies (LLCs) could be formed by filing a document with a state office—typically the state’s Secretary of State—providing minimal information about the entity’s purpose and its ownership. Once formed, a corporation or LLC could then open a bank account, engage in transactions, and file tax returns without ever revealing their ownership.