John C. Coffee Jr.The Corporate Transparency Act Meets the Fifth Circuit
The author writes "This short column will not attempt to rewrite federal procedural law, but it can note that the problem seems to be spreading and involves a level of gamesmanship that matches the increased polarization of our contemporary society. In the past, nationwide injunctions were debated in the context of major controversies, such as abortion."
January 08, 2025 at 10:00 AM
9 minute read
Events have moved swiftly and symptomatically this last month in the Fifth Circuit. Long known as the Circuit with the greatest skepticism of federal regulation of the economy, it turned its attention to the Corporate Transparency Act (“CTA”; 31 U.S.C. §5336), which statute requires non-exempt companies to report the identity of their beneficial owners. While many companies saw the CTA as burdensome and ill-advised, the statute had seemed constitutionally safe because it only regulated commercial activity and only required information. Yet, on Dec. 3, 2024, a district court in the Eastern District of Texas held that the CTA was unconstitutional and issued a nationwide injunction against the enforcement of the CTA and its implementing rule. See Tex. Top Cop Shop, Inc. v. Garland, 2024 U.S. Dist. LEXIS 218294 (E.D. Tex. Dec. 3, 2024).
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