SCOTUS Hears Case Regarding CTA and Reinstates Enforcement of the CTA
Issue Date: January 24, 2025
The Supreme Court of the United States (SCOTUS) recently heard an emergency appeal from the U.S. Department of Justice regarding enforcement of the Corporate Transparency Act (CTA) and the Business Ownership Information (BOI) Rule. SCOTUS sided with the government and lifted an injunction against enforcing the CTA and the BOI Rule on one case. However, a nationwide injunction issued by another court preventing enforcement of the CTA and the BOI Rule remain in place. This means reporting companies are not currently required to file beneficial ownership information reports with FinCEN. However, reporting companies may continue to voluntarily submit beneficial ownership information reports to FinCEN, while these cases work their way through the courts.
The CTA is a 2021 law designed to enhance transparency and prevent the illicit use of anonymous shell companies. The CTA requires the Financial Crimes Enforcement Network (FinCEN), a bureau within the Treasury Department, to enforce the law by collecting beneficial ownership information from reporting entities and beneficial owners.
In December 2024, the 5th Circuit Court of Appeals questioned the constitutionality of the CTA and the Beneficial Ownership Information (BOI) Rule and prevented the government from enforcing the law. The Litigation on this matter continues, and the 5th Circuit will hear oral arguments on the constitutionality of the CTA on March 25, 2025. This means that as a reporting entity and company, you may voluntarily comply at this time.
NAR will continue to provide additional updates and information on the law.
Please find information regarding the SCOTUS decision here. For the latest updates, also please view, fincen.gov/boi.
FinCEN recently issued the following impact statement:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
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On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.