The Corporate Transparency Act (“CTA”) has reached the Supreme Court of the United States (“SCOTUS”). On New Year’s Eve, the U.S. Department of Justice submitted an application to SCOTUS, seeking either a stay of the nationwide injunction or, at a minimum, a limitation of the injunction’s scope to the plaintiffs specifically named in the Texas Top Cop Shop case.
How Did We Get Here?
Although there have been multiple lawsuits filed to stop the implementation of the CTA, the nationwide injunction at issue stems from the Texas Top Cop Shop v. Garland case arising out of the Eastern District of Texas. Below is a timeline of events:
- May 5, 2024 – Six plaintiffs, including Texas Top Cop Shop, Inc., filed a federal complaint alleging that the CTA’s reporting rule is unconstitutional and asked the court to invalidate the CTA and its reporting requirements.
- June 3, 2024 – Plaintiffs filed a motion for a preliminary injunction seeking to halt the implementation of the CTA’s reporting requirements and deadlines.
- December 3, 2024 – The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the CTA, concluding that the CTA “appears likely unconstitutional.” The court did not rule on the constitutionality of the CTA but instead focused on whether the Plaintiffs satisfied the proof necessary for being awarded an injunction. See our post regarding the court’s decision to issue an injunction.
- December 9, 2024 – The Government appealed the issuance of the injunction to the U.S. Court of Appeals for the Fifth Circuit.
- December 13, 2024 – The Government filed a motion to stay the injunction issued by the lower court. A stay of an injunction essentially “lifts” or cancels out the injunction.
- December 23, 2024 – A motions panel for the Fifth Circuit granted the Government’s motion and issued a stay on the injunction against the CTA, essentially reinstating the CTA’s reporting requirements. See our post on the motion panel’s decision.
- December 26, 2024 – A merits panel for the Fifth Circuit reversed course and vacated the stay issued by the motions panel, effectively reinstating the injunction against the CTA. See our post on the merit panel’s decision.
- December 31, 2024 – The Government submitted its application to SCOTUS to review the nationwide injunction.
What Happens Next?
SCOTUS may choose to disregard the application and decline to address the challenges to the CTA, leaving the injunction intact. Alternatively, SCOTUS could opt to overturn or narrow the injunction, reinstating the CTA’s reporting requirements for numerous businesses across the country. As a result, reporting companies should be prepared to promptly submit the required beneficial ownership information (“BOI”) reports.
Filing BOI Reports
Although there is no current mandate for reporting companies to file BOI reports to the Financial Crimes Enforcement Network (“FinCEN”), voluntary submissions are still being accepted. There is no charge to file a BOI report with FinCEN. Reporting companies can simply visit https://boiefiling.fincen.gov to begin the process of filing their BOI report.
Reporting companies will need the following information: (1) the reporting company’s legal name, (2) tax identification number, (3) jurisdiction of formation, and (4) current U.S. address. For their beneficial owners, reporting companies will need the following information: (1) full legal name, (2) residential address, (3) a form of identification, which must be either a state issued driver’s license, a state/local/tribe-issued ID, a U.S. passport, or a foreign passport, and (4) an image of the identification used in number (3). Note: companies formed after January 1, 2024, will also need their company applicant information. See our law bulletin for more details on reporting requirements.
As previously noted, filing a BOI report is free of charge, and a straightforward LLC with only a few beneficial owners can typically complete and submit the report with ease. However, a reporting company may opt to engage a professional, such as an attorney, accountant, or other third-party, to assist with the process for a fee.
Conclusion
While there have been no significant updates to the CTA, it is essential to stay informed about potential changes on the horizon. The Government’s application to SCOTUS could lead to a shift in direction in the near future. As always, we will keep you updated on the latest developments.