BlogLine

It’s back, for now – Nationwide ban lifted on Corporate Transparency Act

1/24/25

By: William R. Covino and Nancy M. Reimer

One lesson is certain: tax practitioners trying to navigate whether their clients must file beneficial ownership reports (“BOI Reports”) must remain vigilant.   

Yesterday, in McHenry v. Texas Top Cop Shop, U.S. Supreme Court Case No. 24A653, the U.S. Supreme Court granted the U.S. Justice Department’s application to stay the nationwide injunction of the Corporate Transparency Act (“CTA”) and its reporting requirements issued by the Eastern District Court of Texas in Texas Top Cop Shop, Inc. et al. v. Merrick Garland, Attorney General of the United States, et al., Civil Action No. 4:24-CV-478 (“Texas Top Cop Shop”). As explained in our prior client updates, this ruling follows the Fifth Circuit previously vacating this injunction while expediting the appeal of Texas Top Cop Shop—only to have its merits panel later reinstate it.   

While Justice Jackson of the U.S. Supreme Court did not see an exigent basis for this petition given the Fifth Circuit’s expedited consideration of the appeal and the Government’s decision to defer implementation of the CTA on its own accord, the U.S. Supreme Court’s ruling nonetheless paves the way for the Department of Treasury’s Financial Crimes Enforcement Network (“FinCen”) to mandate nearly 32.6 million business entities to file BOI Reports. These reports will contain personal information about their owners. As of now, FinCen has not set a new filing deadline for BOI Reports though it is anticipated FinCen will issue an update soon.  

Those hoping the U.S. Supreme Court’s decision resolves any lingering doubt over the CTA and its reporting requirements will be disappointed. The saga is far from over. For now, the U.S. Supreme Court has only halted the nationwide injunction until the Fifth Circuit disposes of the appeal of Texas Top Cop Shop and until it resolves any timely request for further appellate review through a writ of certiorari. Consequently, the U.S. Supreme Court did not address the constitutionality of the CTA or its reporting requirements. Those issues are pending squarely before the Fifth Circuit who will hear oral arguments on them on March 25, 2025.  

Given the revival of the CTA, reporting companies and tax practitioners cannot afford to remain idle. While the future of the CTA is unclear, reporting companies and tax practitioners should continue to compile the necessary information to file BOI Reports in advance of any reporting deadline set by FinCen. We will continue to follow and report developments concerning the CTA and its reporting requirements to you. 

For more information on this topic, please contact Nancy Reimer at nancy.reimer@fmglaw.com; Will Covino at william.covino@fmglaw.com; or your local FMG relationship partner.