CTA Drama Continues – What’s Next for Your Business?

The Corporate Transparency Act ("CTA") is once again in effect for most reporting companies, following a recent decision by the United States Supreme Court. In response to the government’s emergency request, the Supreme Court reinstated enforcement of the CTA, reversing a lower court’s nationwide injunction that had temporarily halted compliance requirements.

The Legal Back-and-Forth

On December 5, 2024, the United States District Court for the Eastern District of Texas issued a nationwide injunction in Texas Top Cop Shop v. Garland, blocking enforcement of the CTA. However, the government quickly appealed to the Fifth Circuit Court of Appeals, which initially granted a stay of the injunction—only to reverse itself a few days later, reinstating the halt to enforcement. The government then sought emergency relief from the Supreme Court, which granted the stay and put the CTA back into effect while the appeal is pending. The Fifth Circuit is scheduled to hear oral arguments on the injunction in March.

Justices Alito and Gorsuch supported granting the stay, while Justice Jackson dissented. Notably, the Supreme Court declined—at least for now—an opportunity to address the broader issue of whether federal district courts should have the power to issue nationwide injunctions, a question former Solicitor General Elizabeth Prelogar had urged the Court to consider. Justice Gorsuch, however, expressed interest in taking up this issue in the future.

What This Means for Businesses

The Financial Crimes Enforcement Network (FinCEN) previously extended the deadline for most businesses formed before December 31, 2023, to file their Beneficial Ownership Information (BOI) reports until January 13, 2025. Following the Supreme Court’s recent decision today, FinCEN has yet to confirm whether it will enforce this deadline or provide further extensions. Given the previous deadline extensions in response to the legal uncertainties, businesses should be prepared for the possibility of another delay, or a new deadline to comply with in the coming days and weeks.

On the other hand, with a change in administration having just occurred and pending legal proceedings, it’s possible that any extension could be structured to allow time for the Fifth Circuit to issue its ruling, rather than simply adding a few weeks for businesses to catch up.

Next Steps for Your Business

For businesses that have held off on filing their BOI reports, now is the time to prepare. While another extension is possible, the prudent course of action is to be ready to act quickly should FinCEN confirm the existing deadline or announce an extension.

If you have questions about your compliance obligations under the CTA, book a consultation with our firm here. In the meantime, stay tuned for further updates as we continue to monitor developments in this evolving regulatory landscape.