The Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements continue to face legal challenges that have created uncertainty for businesses. Below, we provide an update on the current situation, including insights into the legal rulings, potential future developments, and practical advice for businesses.
Recent Legal Developments
Supreme Court Lifts Initial Injunction
On January 23, 2025, the U.S. Supreme Court lifted an injunction issued by U.S. District Judge David Counts in the Western District of Texas. That injunction had temporarily blocked the enforcement of the BOI filing requirements under the CTA. By lifting this injunction, the Supreme Court allowed the government to resume preparations for enforcing the law.
Second Nationwide Injunction Issued
However, a separate legal challenge in the Eastern District of Texas resulted in another nationwide injunction, this time issued by U.S. District Judge Amos Mazzant. This ruling once again halted the enforcement of the CTA. Importantly, this second injunction remains in effect, despite the Supreme Court’s earlier action lifting the first.
How Can a Lower Court Override the Supreme Court Decision?
The situation might seem perplexing, but it is the result of multiple, concurrent legal challenges filed in different jurisdictions. While the Supreme Court lifted Judge Counts’ injunction, the second injunction issued by Judge Mazzant is tied to a separate case with its own specific legal arguments. Until the Supreme Court directly addresses Judge Mazzant’s ruling, the second injunction will continue to block enforcement of the CTA.
Expectations for Future Court Decisions
The Department of Justice is likely to request the Supreme Court to stay Judge Mazzant’s injunction as well. While the Supreme Court has previously indicated a willingness to allow the CTA’s enforcement, there is no guarantee of a swift ruling. Legal experts suggest that the Supreme Court may act within the next several weeks to address this second injunction. However, the outcome will depend on how the justices evaluate the specifics of the Texas case.
Likely Timeline if the Hold Is Lifted
If the Supreme Court stays the second injunction, FinCEN would regain authority to enforce the BOI filing requirements. It is uncertain whether FinCEN would provide additional time for businesses to comply. Given the back-and-forth nature of these legal challenges, businesses should prepare for a short compliance window in the event the hold is lifted. While FinCEN has historically prioritized education and outreach, the legal delays may lead to more rigid deadlines.
FinCEN has not officially stated how they would handle the compliance timeline if enforcement resumes.
Our Recommendations
Despite the current pause, we strongly advise businesses to continue preparing their BOI reports. This proactive approach will help ensure compliance and avoid unnecessary stress to meet potentially tight deadlines if the injunction is lifted.
Our team is closely monitoring the situation and will provide updates as new developments arise. If you have questions about your filing obligations or need assistance preparing your BOI report, please don’t hesitate to contact us at SPTeam@gpw.cpa.
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