Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation. Laws change over time and you should seek counsel to discuss any specific legal questions.
Why The Appeals Ruling on Corporate Transparency Act Matters Now
If you own real estate or operate your business through an LLC, you have likely seen conflicting headlines about the Corporate Transparency Act and whether beneficial ownership reporting is still required. That uncertainty matters because ownership disclosure issues often surface at the worst possible time—during a refinance, a sale, a new investment, or a bank compliance review.
In December 2025, the U.S. Court of Appeals for the Eleventh Circuit upheld the Corporate Transparency Act, confirming that Congress has the constitutional authority to require beneficial ownership reporting. Put simply, the CTA remains valid federal law, and a major constitutional challenge to it has been rejected.
Although current reporting obligations remain limited under Treasury’s March 2025 interim final rule, the ruling significantly strengthens the legal foundation for future enforcement and regulatory expansion. As a result, it is increasingly risky for businesses to assume the CTA issue is going away. Below, we break down what the court actually decided, why the reporting landscape has not fully shifted yet, what real estate owners and entity-heavy businesses should watch next, and practical issues to discuss with counsel to stay ahead of compliance surprises.
Who Should Pay Close Attention
This ruling is especially relevant for business owners and investors who:
- Own or manage one or more LLCs
- Hold real estate through entity structures
- Participate in joint ventures or investment groups
- Use trusts or multi-tier ownership arrangements
- Are planning a refinance, sale, or succession
- Have foreign owners or investors involved
Whether and how the CTA may apply depends heavily on an entity’s structure and ownership. Businesses in these categories should be aware of how the law is evolving and consider reviewing potential exposure with legal counsel.
Background: What the Corporate Transparency Act Does
Purpose of the CTA
The Corporate Transparency Act was recently signed into law as part of broader federal anti–money laundering reforms. Its primary goal is to reduce the use of anonymous entities for activities such as fraud, tax evasion, money laundering, and other illicit conduct.
Beneficial Ownership Reporting
The statute requires certain businesses to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Beneficial owners generally include individuals who either own a specified percentage of an entity or exercise substantial control over it, not merely those listed in public filings.
Beneficial ownership reporting is designed as a nonpublic compliance mechanism. Beneficial ownership information is not publicly searchable and is subject to statutory access and confidentiality restrictions.
How the Case Reached the 11th Circuit
The 2024 District Court Decision
In 2024, a federal district court in Alabama ruled that the CTA exceeded Congress’s constitutional authority, concluding that the statute improperly regulated the non-commercial act of entity formation. The decision created uncertainty regarding the law’s enforceability at a national level.
The Federal Appeal
The federal government appealed that decision, and in December 2025, the Eleventh Circuit reversed the lower court’s ruling and concluded that the statute is constitutionally sound.
The 11th Circuit December 2025 Ruling on Corporate Transparency Act
National Small Business United v. U.S. Department of the Treasury, No. 24-10736
The court held that the Corporate Transparency Act is a valid exercise of congressional power under the Commerce Clause and rejected the primary constitutional challenges raised by business groups.
What the 11th Circuit Actually Decided
Congress Has Authority Under the Commerce Clause
The court rejected the argument that the CTA merely regulates entity formation, which critics characterized as non-economic activity.
Instead, the court determined that the statute regulates economic conduct with a substantial effect on interstate commerce. In practical terms, this means Congress may require ownership disclosure for business entities without exceeding its constitutional authority.
Privacy and Fourth Amendment Challenges Were Rejected
Opponents argued that beneficial ownership reporting amounted to an unreasonable search. The court disagreed, relying on long-standing precedent approving uniform and limited reporting requirements that include statutory confidentiality safeguards.
Other Constitutional Arguments Were Not Addressed
Because Commerce Clause authority was sufficient to uphold the statute, the court did not reach alternative arguments regarding other constitutional powers, such as Congress’s taxing authority or foreign affairs powers.
What the Ruling Did Not Do
The decision did not expand reporting obligations, set new compliance deadlines, or override existing Treasury or FinCEN rules governing the scope of beneficial ownership reporting.
Why Reporting Requirements Have Not Expanded Yet
FinCEN’s Interim Final Rule
Following earlier litigation, the Treasury Department—through FinCEN—issued an interim final rule in March 2025 that significantly narrowed the scope of current reporting obligations.
Current Reporting Landscape
Under the existing regulatory framework:
- Most domestic U.S. entities are exempt from beneficial ownership reporting under the interim final rule
- Foreign entities registered to do business in the United States generally remain subject to reporting
This narrowed scope reflects administrative and policy choices made through rulemaking, rather than any limitation imposed by the Eleventh Circuit’s constitutional ruling. The court made clear that the CTA itself remains valid federal law.
Why This Matters for Real Estate Owners and Investors
Common Entity Structures in Real Estate
LLCs and corporations are widely used to hold real estate, manage investments, and limit liability. If reporting requirements expand through future regulatory action, real estate entities may be required to disclose individuals behind the structure, including partners, managers, trust beneficiaries, or other persons exercising ownership or substantial control.
Potential concerns include privacy, compliance costs, and penalties for inaccurate or late reporting.
Transaction and Financing Considerations
Lenders, title insurers, and counterparties may increasingly request confirmation of CTA compliance—or confirmation of exemption under current rules—as part of due diligence. Buyers acquiring entities may also inherit future reporting obligations tied to the entity’s structure.
Foreign Ownership Issues
Foreign entities registered to do business in the United States already face greater reporting exposure under current rules. Transactions involving foreign investors or foreign-formed entities often require additional planning to address beneficial ownership compliance risks.
Federal and State Transparency Trends
Federal beneficial ownership reporting is only one part of a broader transparency trend. Some states have adopted or proposed their own disclosure regimes, and businesses should recognize the potential for overlapping federal and state compliance requirements.
These issues also intersect with recent Arizona-specific compliance changes. For additional context, see our article on Arizona LLC Filing Changes for 2026: What Owners Need to Know.
Key Areas to Watch
Several developments remain possible:
- Further litigation, including potential Supreme Court review
- Regulatory changes expanding BOI reporting obligations to domestic U.S. entities
- Congressional refinements addressing business, administrative, and privacy concerns
The legal foundation for future enforcement and regulatory expansion is now significantly stronger than it was prior to the Eleventh Circuit’s ruling.
Frequently Asked Questions on the Corporate Transparency Act
Is the Corporate Transparency Act currently enforceable?
Yes. The Corporate Transparency Act has been upheld as constitutional and remains valid federal law. However, current beneficial ownership reporting obligations are limited under Treasury’s March 2025 interim final rule, which narrows which entities must file reports at this time.
Do Arizona LLCs need to file beneficial ownership reports now?
Most domestic Arizona LLCs are currently exempt from beneficial ownership reporting under the existing interim final rule. That exemption reflects an administrative and policy choice, not a permanent statutory change, and reporting requirements could expand through future regulatory action.
Does the CTA affect real estate holding companies?
Potentially, yes. Real estate holding companies frequently use LLCs and layered ownership structures that fall within the types of entities Congress sought to regulate through the CTA. If reporting obligations expand, real estate entities would likely be among those impacted.
What happens if reporting requirements expand in the future?
Willful violations of the CTA may expose entities and individuals to civil penalties and, in some cases, criminal liability. For that reason, businesses may wish to monitor developments closely and discuss potential obligations with legal counsel before reporting requirements change.
Key Takeaways for Arizona Business Owners
- The Corporate Transparency Act has been upheld and remains valid, enforceable federal law
- Current reporting obligations are limited by regulation, but the legal foundation for future enforcement is now firmly in place
- Businesses that rely heavily on LLCs or complex ownership structures should not assume the issue is settled
- Beneficial ownership compliance is increasingly part of routine business risk management rather than a remote regulatory concern
Staying Informed on FinCEN Beneficial Ownership Reporting
Business owners, managing partners, and operators may wish to consider the following general steps as the regulatory landscape continues to evolve:
- Periodically reviewing entity structures with legal and tax advisors
- Identifying individuals who may qualify as beneficial owners or persons exercising substantial control
- Maintaining organized ownership and governance documentation
- Tracking FinCEN announcements and changes in federal beneficial ownership requirements
Businesses with specific questions or concerns should consult qualified legal counsel to evaluate how the Corporate Transparency Act and related regulations may apply to their particular circumstances.
Call Gottlieb Law today at 602-899-8188 or use our Contact Us page here to schedule your initial consultation.
Gottlieb Law, PLC provides this article for information purposes only and nothing herein creates an attorney-client relationship. You should not take any actions in reliance on any of the information contained herein without consulting with qualified legal counsel first and reading this article is not a proper substitute for seeking legal advice of your specific situation. Laws change over time and you should seek counsel to discuss any specific legal questions.