SCOTUS Weighs In, But Chaos Reigns
On January 23, 2025, the Supreme Court of the Unites States (SCOTUS) issued a temporary stay of a Texas Federal Court’s preliminary injunction of the beneficial ownership information (“BOI”) reporting obligations under the Corporate Transparency Act (“CTA”). To complicate matters, the SCOTUS ruling does not address a separate injunction issued by a different Texas Federal Court.
The application for a stay of the injunction was referred to Justice Alito. Justice Gorsuch separately concurred with Justice Alito, suggesting that SCOTUS ought to consider the bigger question whether a Federal District Court has the power or authority to issue universal injunctive relief concerning federal legislation. Justice Jackson dissented from the grant of stay. You can download the SCOTUS ruling here.
In its brief ruling, SCOTUS does not address the merits of the underlying challenge to the CTA on constitutional grounds. CTA’s constitutionality is therefore not settled law and likely will not be resolved anytime soon. Further, it is not yet clear whether the Trump administration intends to enforce the CTA, modify the administrative rules that govern its enforcement, or urge Congress to modify or repeal the law.
The injunction could spring back to life when the merits are considered by the United States Court of Appeals for the Fifth Circuit, which has appellate jurisdiction in Texas, Louisiana, and Mississippi. The Fifth Circuit is hearing the case on an expedited basis.
The CTA affects most small businesses in Colorado. What now? In response to the SCOTUS ruling, the U.S. Department of the Treasury, through its Financial Crimes Enforcement Network (“FinCEN”), has published the following guidance on its official website concerning whether reporting companies must file BOI reports at the present time (emphasis added):
“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.”
For background, helpful reference materials, and future alerts concerning the law and its enforcement, refer to FinCEN’s official website at https://fincen.gov/boi.