Supreme Court Weighs in on Enforcement of Corporate Transparency Act

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Overview of the Supreme Court’s Action

The Supreme Court, on January 23, 2025, stayed the preliminary injunction that previously blocked enforcement of the Corporate Transparency Act (“CTA”). This follows a rapid turn in events on December 26, 2024, when a separate Fifth Circuit panel reinstated the nationwide injunction on enforcement of the CTA, which was previously vacated by a Fifth Circuit motions panel on December 23, 2024. In that now vacated order, the Fifth Circuit motions panel granted a stay of the US District Court for the Eastern District of Texas’s ruling in Texas Top Cop Shop, Inc. v. Garland, which issued a preliminary injunction enjoining the CTA and beneficial ownership information (“BOI”) reporting requirements, pending the outcome of the Department of the Treasury’s ongoing appeal of the Texas district court’s order. 2024 WL 4953814 (E.D. Tex. Dec. 3, 2024).

While the Supreme Court’s action permits a way forward for the government to move ahead with enforcement of the CTA, it does not reinstate the previously extended deadline to file BOI reports with FinCEN. Reporting companies are not currently required to file beneficial ownership reports with FinCEN and are not subject to liability if they fail to do so while the preliminary injunction remains in place. However, reporting companies may continue to voluntarily submit beneficial ownership reports through the BOI portal. Reporting companies that have already filed their reports need not take any action at this time. We note that oral arguments for the Fifth Circuit’s merits decisions are scheduled for March 25, 2025, and that there are numerous pending litigations challenging the constitutionality of the CTA at this time.

How to Proceed in Light of the Supreme Court’s Action

We continue to recommend that reporting companies gather the requisite materials to be prepared to submit new filings, but that they pause on submitting such filings and closely monitor developments. However, following the most recent FinCEN alert, we continue to advise reporting companies that have not filed, and that do not wish to file voluntarily, be prepared to file on short notice. Considering that FinCEN is accepting BOI reports on a voluntary basis at this time, it may be in a reporting companies interest to proceed with filing depending on specific circumstances.

We are available to assist with filing such a report, and further information to file a report, such as the official form and relevant exemptions, can be found on the FinCEN FAQ. For a more in depth overview of BOI reporting requirements, please refer to our previous post on January 10, 2024.

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