
Recent events have cast a shadow over the enforcement of the Corporate Transparency Act (CTA) and its requirements for beneficial ownership information (BOI) reporting to the Financial Crimes Enforcement Network (FinCEN).
A nationwide injunction is currently in place, presenting significant legal obstacles.
Injunction Ruling and DOJ Response
On December 3, 2024, a U.S. District Court in Texas issued a preliminary nationwide injunction in the case of Texas Top Cop Shop, Inc., et al. v. Garland, et al.
This ruling effectively halts any enforcement of the CTA and the mandated BOI filings, which were originally scheduled to begin by January 1, 2025.
The U.S. Department of Justice (DOJ) is challenging this decision, seeking either to lift the injunction or at least narrow its impact to just the plaintiffs involved and participants of the National Federation of Independent Business.
Fifth Circuit Developments
The situation took a turn on December 23, 2024, when the Fifth Circuit Court of Appeals granted the DOJ’s urgent request, momentarily staying the injunction.
However, this decision was short-lived; just three days later, another panel of the Fifth Circuit reversed the stay, reinstating the nationwide injunction.
As a result, FinCEN has updated its guidance, clarifying that while businesses may opt to file their BOI voluntarily, they are not required to do so while the injunction holds.
Future Implications for Businesses
Continuing this legal saga, on December 31, 2024, the DOJ applied for emergency relief from the U.S. Supreme Court, requesting that the injunction be maintained while the Fifth Circuit reviews the case.
They also urged the Supreme Court to treat this application as a petition for certiorari, challenging the district court’s decision to grant comprehensive preliminary relief.
The situation surrounding BOI reporting is shrouded in uncertainty.
If the Supreme Court does not intervene, the nationwide injunction may remain in effect at least until March 25, 2025, when oral arguments are set to take place in the Fifth Circuit.
Businesses that have yet to complete their reporting obligations should keep a close watch on these developments.
Should the Supreme Court lift the injunction or issue a stay, companies may find themselves under pressure to quickly submit their beneficial ownership information, adhering to any new deadlines imposed by FinCEN.
Although voluntary submissions are currently allowed, organizations should be poised for potential compliance demands as the situation evolves.
The coming months will be crucial for the future enforcement of the CTA and its consequences for businesses affected by these policies.
Source: Natlawreview