The U.S. Supreme Court has lifted a nationwide injunction imposed by a Texas judge last month barring the Treasury Department from enforcing the Corporate Transparency Act.

We think the injunction should have stood to protect American small business owners as the courts decide the constitutionality of the act, a measure that we fear will turn otherwise honest citizens into unwitting felons.

However, we are encouraged by the lone dissent of a liberal justice who not only made a compelling argument that the government would not be harmed if the injunction remained in force, but we think tore at the very underpinnings of the act.

Congress passed the act in 2021 to provide the Treasury Department with tools to catch drug cartels and other criminals who are using small businesses to launder their illicit profits.

The law applies to corporations with fewer than 20 employees and gross revenue of under $5 million. It would ensnare many family farms and ranches.

Under the law, all persons who own at least 25% of a small business or have “substantial influence” must submit to the Treasury Department’s financial crimes unit their full legal name, date of birth and physical address, and a copy of an official photo identification, such as a driver’s license.

Those who meet the requirements but fail to report could face fines of $500 a day, up to $10,000, and two years in prison. Initial reports are due Jan. 1, 2025. Any changes of a person’s status must be reported within 30 days.

Where no money laundering is found, federal agents might well discover an owner or person with “significant influence” who has become an unwitting felon by inadvertently not filing.

The court overturned an order by U.S. District Judge Amos Mazzant in East Texas, who ruled the law was likely unconstitutional. The Supreme Court did not address the law’s constitutionality, but lifted the injunction pending the government’s appeal to the 5th Circuit Court.

But in her dissent Justice Ketanji Brown Jackson made a clear and compelling case against the government’s argument that the enforcement of the act must begin without delay, and raised questions whether the act is even necessary.

She stated the 5th Circuit has expedited the government’s appeal and doubted claims delaying the reporting deadline will harm the government.

The Treasury Department set a reporting deadline that was nearly four years after Congress passed the law, she noted.

“The government has provided no indication that injury of a more serious or significant nature would result if the act’s implementation is further delayed while the litigation proceeds in the lower courts,” Jackson stated.

We agree. While we don’t support money laundering, we question why it took the government so long to implement a law that it says is so vital to thwarting drug traffickers, tax dodgers, human smugglers and other high-level criminals.

The law is an insidious encroachment on the liberty of law-abiding U.S. citizens not suspected of anything. It must not stand.