The Corporate Transparency Act Litigation Goes to Washington: Will the U.S. Supreme Court Save It?

By: Sarah Hibbard, Tracy A. Olson, Brett W. Johnson, Garth D. Stevens, Kenneth Ashton, and John G. Weston
 
On December 31, 2024, the Department of Justice (DOJ), on behalf of the U.S. Treasury and the Financial Crimes Enforcement Network (FinCEN), filed an application to the Supreme Court of the United States to stay the nationwide injunction imposed by the Fifth Circuit Court of Appeals on December 26, 2024, which effectively suspended enforcement of the reporting requirements under the Corporate Transparency Act of 2020 (CTA). On January 3, 2025, Justice Samuel Alito ordered a response from the plaintiffs as to the Government’s emergency application by January 10, 2025.
 
In its application, the Government asked the Supreme Court to either stay the injunction pending a decision on the appeal to the Fifth Circuit or to narrow the injunction in scope such that the preliminary injunction would apply only to the parties in the underlying case. The application also invited the Court to treat the application “as a petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.”¹
 
What Does This Mean for CTA Compliance?
 
Until the Supreme Court issues a decision on the Government’s application, the original nationwide preliminary injunction is still in effect. Thus, as of December 26, 2024, reporting entities are not currently required to file Beneficial Ownership Information (BOI) reports with FinCEN.
 
The CTA is not dead. However, unless and until the Supreme Court orders otherwise, BOI reports are not required to be filed (even with FinCEN’s extended deadlines). At this point, it is still up to each reporting entity to decide if it wants to comply with the CTA’s BOI reporting requirement by the January 13, 2025 filing deadline (or other applicable filing deadlines for reporting entities formed in 2024 or thereafter) or if instead, it wants to wait out the judicial process before filing any required BOI report.
 
Due to the nature of the application reviewing the stay of the CTA and the Government’s invitation to have the Supreme Court address the merits of the nationwide injunction directly, the Supreme Court’s action on the pending application could (a) result in the Supreme Court granting certiorari on the limited issue of nationwide injunctions, the result of which may keep the current injunction in place until the Supreme Court addresses the matter; (b) deny the application, allow the injunction of the CTA and pending proceedings on the preliminary injunction to continue in the Fifth Circuit; (c) grant the application and stay the preliminary injunction (with or without reasoning); and/or (d) send the case back to the Fifth Circuit or potentially the United States District Court for the Eastern District of Texas for review based on specific guidance that may impact the injunction. This last option may be necessary if there is a fact dispute question that is more appropriately addressed by the District Court.
 
As noted above, the Supreme Court has set an expedited briefing schedule for the emergency application. Supreme Court rules permit interested parties to file amicus briefs if the amicus needs to bring “to the attention of the Court relevant matter not already presented by the parties that will be of considerable help to the Court.”² Entities with perspectives not covered by the application or the response brief filed on January 10, 2025 should consider acting expeditiously to file a brief explaining that perspective, as they are required to be filed “as promptly as possible.”
 
At the same time, the Government’s appeal of the preliminary injunction is now pending with the merits panel of Fifth Circuit Court of Appeals. Key filing dates include the following:

It is uncertain how the Fifth Circuit will answer the CTA’s constitutionality questions.

Impacted entities or other interested non-governmental organizations may consider weighing in and filing an amicus curiae brief in this matter to inform the Fifth Circuit how its forthcoming opinion might impact business operations or other constitutional rights. While the Fifth Circuit’s scheduling order does not address amicus timelines, under the Rules of Appellate Procedure briefs are typically due seven days after the merits brief of the party being supported is filed (i.e., February 14 for briefs supporting Appellants or no party and February 28 for briefs supporting Appellees). However, the Court’s expedited timeline may impact this time frame, so interested parties should consider making preparations now.
 
Of note, following this ruling on December 23, 2024, FinCEN extended the BOI reporting deadlines, including extending the deadline for pre-2024 existing reporting entities to January 13, 2025. FinCEN has stated that it will honor the Fifth Circuit’s injunction and no reports are required at this time. It is expected that if the stay is lifted, FinCEN will again provide a further deadline, likely again 30 days, for any compliance. It is unclear whether the new Trump administration will pursue the appeal or make changes to the reporting requirements (noting that President Trump originally had vetoed passing the CTA into law near the end of his term in 2020). If changes are made, then the deadline would again be extended. However, the use of data in BOI reports already submitted to FinCEN is an open question. The CTA was enacted on the premise to combat money laundering and other financial crimes. 
 
There are also opportunities for outreach regarding congressional action. Accordingly, for those entities that have already submitted BOI reports with FinCEN, it will be important to understand how FinCEN might utilize these entities’ information in enforcing other laws. Companies, trade organizations, and other interested parties should take the opportunity to review the impact of the CTA on their operations and determine whether to vocalize any concerns via the Fifth Circuit (or the Supreme Court, if relief is sought there) or through the legislative process.