The U.S. Supreme Court yesterday ordered a stay of a nationwide injunction preventing enforcement of the Corporate Transparency Act and its requirement for businesses to report their beneficial ownership information to the Financial Crimes Enforcement Network. However, other injunctions remain in effect, and FinCEN said today that reporting companies are not required to file BOI at this time.
In the case reviewed by the Supreme Court — Texas Top Cop Shop vs. Garland — the plaintiffs challenged the constitutionality of the CTA, which requires covered businesses to report their BOI to FinCEN. In December, the Fifth Circuit Court of Appeals reviewed the case and lifted a nationwide injunction previously issued by a district court judge in Texas. However, three days later, “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” a panel of Fifth Circuit judges vacated that decision and once again enjoined enforcement of the reporting rule and CTA, putting the reporting requirement on hold once again.
The Justice Department appealed to the Supreme Court for a stay of the Fifth Circuit injunction. The high court granted that request, which allows the CTA to be enforced while the courts weigh the merits of the case.
The Texas Top Cop Shop lawsuit is one of several legal challenges to the CTA. FinCEN noted that a separate nationwide order issued by a different federal judge in Texas — Smith v. U.S. Department of the Treasury — remains in place, so “reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop.”
