Corporate Transparency Act - The Gift that Keeps on Giving - Government Appeals to the U.S. Supreme Court to Eliminate Nationwide Injunction

Not content to have an expedited hearing in March on the merits of the case at the Fifth Circuit Court of Appeals regarding the constitutionality of the Corporate Transparency Act (CTA), the Government filed an application with the U.S. Supreme Court on New Year’s Eve to stay (eliminate) the nationwide injunction or to at least narrow it to the plaintiffs in the case (Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al.). The preliminary nationwide injunction currently in effect means that the Financial Crimes Enforcement Network of the Department of Treasury (FinCEN) cannot enforce the CTA, and reporting companies are not required to file (or update) their beneficial ownership information reports (BOIRs).

The Government’s application to the U.S. Supreme Court has no immediate impact on the existing nationwide injunction. The U.S. Supreme Court is not required to answer the application. However, it could determine to take on some or all of the issues presented in the application on a discretionary basis and on its own timeline, which could be quick or not so quick.  If the Supreme Court were to determine to stay (eliminate) or narrow the injunction, BOIR filing requirements could spring back to life, and it is not clear if FinCEN would extend any filing deadlines; therefore, reporting companies may need to act quickly if the Supreme Court takes action. FinCEN has provided an updated alert on the status of this case and other cases related to the CTA, reiterating its belief that the CTA is constitutional and that it will continue to defend the law. We will continue to monitor the situation.