US Supreme Court allows small business registration rule to take effect

The Supreme Court has revived a requirement that owners of millions of small businesses register with an arm of the Treasury Department charged with fighting money laundering and other financial crimes.

The justices granted an emergency plea made by the Justice Department in the waning days of the Biden administration to allow enforcement of the Corporate Transparency Act, enacted in 2021 to crack down on the illicit use of anonymous shell companies.

Owners and part-owners of an estimated 32.6 million small businesses must register personal information with Treasury's Financial Crimes Enforcement Network, or FinCEN. The information includes photo IDs and home addresses.

It's unclear whether the Trump administration will devote much effort to enforcing the registration requirement, which has been opposed by Republican-led states and lawmakers, as well as conservative and business interest groups.

The registration requirement was blocked by a federal judge in Texas, who ruled that Congress lacked the authority to pass the corporate transparency law in the first place. It was kept on hold by a panel of the 5th U.S. Circuit Court of Appeals pending its review of the judge's ruling.

The Supreme Court action allows enforcement of the registration requirement while the Texas case winds through the courts.

The National Small Business Association, which earlier challenged the reporting requirements in court, urged FinCEN to give businesses ample time to comply with the requirement.

This decision creates even more uncertainty for the millions of small businesses we represent, said NSBA President and CEO Todd McCracken. I cannot stress enough what a major problem this back-and-forth is and the massive uncertainty it creates for the millions of small businesses across this country.

He called on Congress to delay and repeal the CTA.

Karen Kerrigan, president & CEO, Small Business & Entrepreneurship Council, said the order likely isn't the end of the go-stop-go story of the reporting requirement.

At this point in time and with the cloud of uncertainty still hanging over CTA's legality, we are urging President Trump to step in and provide immediate penalty relief for late filers, of which there are likely millions of small business owners, she said. The CTA confusion and chaos continues, and Congress really needs to step up and repeal the mandate.

A coalition of labor, environmental and other progressive organizations that support the law praised the court for paving the way for its enforcement.

For years, police and prosecutors have tried to combat a flood of dirty money associated with often violent crimes, but that can't happen if they run into a wall of shell companies and secrecy, Ian Gary, executive director of the FACT Coalition, said in a statement. Today's order is a reminder of the urgency of opening the money trail so our law enforcement officials can crack down on criminals who abuse the system.