injunction

The Supreme Court of the United States (“SCOTUS”) has issued its decision concerning the nationwide injunction against the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements.
On Thursday, January 23, 2025, SCOTUS ruled to allow the Government to enforce the CTA, which requires millions of businesses to file BOI reports. The justices stayed, or lifted, the nationwide injunction that had been blocking the CTA's enforcement. This decision permits the government to proceed with implementing the CTA while its merits are reviewed by the U.S. Court of Appeals for the Fifth Circuit, which is scheduled to hold oral arguments on March 25.
What does this all mean?
Although this decision lifted the injunction against the CTA, there is another lawsuit that has placed the CTA reporting requirements on hold. See our post on the Smith v. U.S. Department of the Treasury for more information. As of the time of this publication, the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury has updated their website to confirm that businesses are not currently under any obligation to file BOI reports. Business owners are encouraged to visit the FinCEN website regularly to stay informed about the latest reporting requirements and deadlines.
The push to repeal the CTA goes beyond the court system.
While multiple lawsuits have been filed challenging the constitutionality of the CTA, there has also been legislative activity aimed at repealing it. Representative Warren Davidson and Senator Tommy Tubervillehave reintroduced legislation in their respective chambers of Congress to repeal the CTA. These proposals were introduced in the previous congressional session but did not advance. With the new administration and a Republican majority in both chambers of Congress, it will be interesting to see how these efforts progress.
How do I file a BOI report?
Business owners can still voluntarily complete all BOI reporting by visiting the FinCEN website. There is no cost to file a BOI report. However, if a business engages a tax professional, attorney, or other third party to file a BOI report on its behalf, the business will be responsible for covering any professional fees associated with the preparation and submission of the report.
Reporting companies will need the following information: (1) the reporting company’s legal name, (2) tax identification number, (3) jurisdiction of formation, and (4) current U.S. address. For their beneficial owners, reporting companies will need the following information: (1) full legal name, (2) residential address, (3) a form of identification, which must be either a state issued driver’s license, a state/local/tribe-issued ID, a U.S. passport, or a foreign passport, and (4) an image of the identification used in number (3). See our law bulletin for more details on reporting requirements.
Conclusion.
For now, businesses are not required to file BOI reports with FinCEN. However, should the Government appeal the decision in the Smith case, things could change. As always, we will try our best to keep you informed of the latest developments.
Tags: Supreme Court of the United States, SCOTUS, BOI, CTA, corporate transparency act, beneficial ownership information, BOI Reporting, FinCEN, injunction, stay, legislation, Business, Business Owners, beneficial owners
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The Corporate Transparency Act ("CTA") has reached the Supreme Court of the United States (“SCOTUS”). On New Year’s Eve, the U.S. Department of Justice submitted an application to SCOTUS, seeking either a stay of the nationwide injunction or, at a minimum, a limitation of the injunction's scope to the plaintiffs specifically named in the Texas Top Cop Shop case.
How Did We Get Here?
Although there have been multiple lawsuits filed to stop the implementation of the CTA, the nationwide injunction at issue stems from the Texas Top Cop Shop v. Garland case arising out of the Eastern District of Texas. Below is a timeline of events:
- May 5, 2024 – Six plaintiffs, including Texas Top Cop Shop, Inc., filed a federal complaint alleging that the CTA’s reporting rule is unconstitutional and asked the court to invalidate the CTA and its reporting requirements.
- June 3, 2024 – Plaintiffs filed a motion for a preliminary injunction seeking to halt the implementation of the CTA’s reporting requirements and deadlines.
- December 3, 2024 – The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the CTA, concluding that the CTA “appears likely unconstitutional.” The court did not rule on the constitutionality of the CTA but instead focused on whether the Plaintiffs satisfied the proof necessary for being awarded an injunction. See our post regarding the court’s decision to issue an injunction.
- December 9, 2024 – The Government appealed the issuance of the injunction to the U.S. Court of Appeals for the Fifth Circuit.
- December 13, 2024 – The Government filed a motion to stay the injunction issued by the lower court. A stay of an injunction essentially “lifts” or cancels out the injunction.
- December 23, 2024 – A motions panel for the Fifth Circuit granted the Government’s motion and issued a stay on the injunction against the CTA, essentially reinstating the CTA’s reporting requirements. See our post on the motion panel’s decision.
- December 26, 2024 – A merits panel for the Fifth Circuit reversed course and vacated the stay issued by the motions panel, effectively reinstating the injunction against the CTA. See our post on the merit panel’s decision.
- December 31, 2024 – The Government submitted its application to SCOTUS to review the nationwide injunction.
What Happens Next?
SCOTUS may choose to disregard the application and decline to address the challenges to the CTA, leaving the injunction intact. Alternatively, SCOTUS could opt to overturn or narrow the injunction, reinstating the CTA's reporting requirements for numerous businesses across the country. As a result, reporting companies should be prepared to promptly submit the required beneficial ownership information (“BOI”) reports.
Filing BOI Reports
Although there is no current mandate for reporting companies to file BOI reports to the Financial Crimes Enforcement Network (“FinCEN”), voluntary submissions are still being accepted. There is no charge to file a BOI report with FinCEN. Reporting companies can simply visit https://boiefiling.fincen.gov to begin the process of filing their BOI report.
Reporting companies will need the following information: (1) the reporting company’s legal name, (2) tax identification number, (3) jurisdiction of formation, and (4) current U.S. address. For their beneficial owners, reporting companies will need the following information: (1) full legal name, (2) residential address, (3) a form of identification, which must be either a state issued driver’s license, a state/local/tribe-issued ID, a U.S. passport, or a foreign passport, and (4) an image of the identification used in number (3). Note: companies formed after January 1, 2024, will also need their company applicant information. See our law bulletin for more details on reporting requirements.
As previously noted, filing a BOI report is free of charge, and a straightforward LLC with only a few beneficial owners can typically complete and submit the report with ease. However, a reporting company may opt to engage a professional, such as an attorney, accountant, or other third-party, to assist with the process for a fee.
Conclusion
While there have been no significant updates to the CTA, it is essential to stay informed about potential changes on the horizon. The Government's application to SCOTUS could lead to a shift in direction in the near future. As always, we will keep you updated on the latest developments.
Tags: CTA, BOI, beneficial ownership information, corporate transparency act, beneficial owners, SCOTUS, Supreme Court of the United States, Fifth Circuit, injunction
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The Court of Appeals for the Fifth Circuit has given us another holiday surprise! The nationwide injunction on the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements is once again in effect.
On December 23, 2024, we reported that the Court of Appeals for the Fifth Circuit had lifted a nationwide injunction on the CTA and its BOI reporting requirements. Consequently, all reporting obligations were reinstated for businesses nationwide. Following the Fifth Circuit’s decision to stay the injunction, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) extended the filing deadline for most reporting companies to January 13, 2025. We knew at the time that this would not be the last we would hear of the CTA and BOI reporting requirements, but what we did not know was how quickly another update would occur.
On December 26th, just days after lifting the nationwide injunction, the Fifth Circuit issued another order vacating its stay, effectively reinstating the nationwide injunction and halting the BOI reporting requirements under the CTA once more. The court ruled that the order from the motions-panel granting the stay on the injunction be vacated “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments. . .”
How did the Fifth Circuit manage to both lift and later reinstate the nationwide injunction? The explanation lies in the distinct panels of judges that handle motions and appeals. One panel, the "motions-panel," reviewed the Government's "emergency motion for a stay pending appeal," while a different panel, the "merits panel," is evaluating the case based on its merits. These two panels reached differing conclusions regarding the federal district court's issuance of the preliminary injunction. The following timeline summarizes the events that have brought us to the current situation:
- On December 3rd, a federal district court found the CTA likely to be unconstitutional and imposed a nationwide preliminary injunction on the CTA and its BOI reporting requirements.
- The Government appealed the decision, and a motions-panel of the Fifth Circuit considered the Government's "emergency motion for a stay [of the preliminary injunction] pending appeal." On December 23rd, the panel sided with the Government, lifting the injunction based on the likelihood that the Government would succeed in proving the CTA's constitutionality. The panel did not address the merits of the case but solely ruled on whether the district court's injunction should remain in place.
- The appeal is now before the merits panel of the Fifth Circuit which gave us our latest update and vacated the motions-panel’s order granting the Government’s motion to stay the district court’s preliminary injunction. Thus, the merits panel reinstated the December 3rd injunction.
What now?
The case is currently before the merits panel of Court of Appeals for the Fifth Circuit and has been expedited to the next available oral argument panel. We may receive another update on the status of BOI reporting and the CTA in just a few short days. While the Fifth Circuit continues to review the case, there are other federal courts considering challenges to the CTA. This case, and potentially other CTA cases, can still be brought before the Supreme Court of the United States for a final determination.
However, as it stands, all BOI reporting requirements of the CTA have been suspended. While there is currently no obligation to meet the extended BOI reporting deadline, business owners can still voluntarily file their BOI reports with FinCEN. We will do our best to keep you up to date on any developments on BOI reporting and the CTA.
Tags: BOI, CTA, beneficial ownership information, corporate transparency act, injunction, stay, vacate
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