In a new twist to the ongoing legal battle over the Corporate Transparency Act (CTA), the Fifth Circuit Court of Appeals has reinstated a nationwide injunction blocking its enforcement. The December 26 decision reverses a ruling issued just three days earlier that had briefly allowed the law to proceed, leaving businesses grappling with renewed uncertainty.
The CTA, designed to combat financial crimes such as money laundering and terrorism financing, requires certain U.S. entities to disclose their beneficial owners to the U.S. Treasury Department. While supporters view it as a key measure for closing transparency gaps, the law has faced numerous legal challenges.
One challenge, brought by Texas Top Cop Shop Inc., argued that the CTA violates constitutional principles, including states’ rights under the Tenth Amendment and federal power limitations under the Commerce Clause. A Texas district court agreed, issuing a nationwide injunction on December 3.
On December 23, a motions panel of the Fifth Circuit lifted that injunction, agreeing with the government’s assertion that the CTA is likely to withstand constitutional scrutiny. However, just days later, a different Fifth Circuit panel—tasked with hearing the case’s merits—reinstated the injunction.
In its December 26 order, the panel emphasized the importance of maintaining the “constitutional status quo” while the legal arguments are fully considered. The decision once again halts the nationwide enforcement of the CTA.
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