A hollow victory for the Corporate Transparency Act

A lot has happened with the Corporate Transparency Act and whether BOI reports are required to be filed at this time.

In sum, in early December 2024, a federal court in Texas blocked nationwide enforcement of the CTA, effectively putting BOI reporting on hold. The government appealed to the Fifth Circuit, and on Christmas Eve, the Fifth Circuit lifted the injunction, putting the BOI filing back in play just days before the deadline. Then, two days later, on December 26th, the Fifth Circuit reversed itself and put the CTA on hold and set an expedited review of the government’s appeal, setting oral argument for March 25, 2025. Meanwhile, the government appealed that decision to the Supreme Court of the United States, asking that they (1) lift the injunction on enforcement of the CTA pending the appeal, and (2) just decide the whole matter to give certainty to all the businesses who are required to file.

Yesterday afternoon, the Supreme Court, in an unsigned order, granted the government’s emergency motion to lift the injunction prohibiting enforcement of the CTA. On its face, it would appear that the BOI reporting is back in tact, until the Supreme Court makes a final decision on this.

BUT, of course this has to be convoluted. Another district judge in Texas has entered a temporary nationwide injunction on January 7^th in another case prohibiting enforcement of the CTA, and that injunction continues. So there is no change at the moment on this regulation being paused, but at least we know some of the Supreme Court justices view enforcement of the CTA favorably. From the order, it appears Justices Alito and Gorsuch support lifting the injunction. Gorsuch filed a concurrence arguing that the Court should definitively resolve this now, focusing on whether a district court has the authority to issue “universal injunctive relief” (i.e., a court in Texas should not be able to issue a nationwide injunction). Justice Brown Jackson dissented from granting the stay because she found (1) the Fifth Circuit has already expedited its review of the government’s appeal, and (2) the government has not provided adequate proof of exigency if implementation is further delayed “[h]owever likely the Government’s success on the merits may be.”

The bottom line is that BOI reporting still remains on hold. If the BOI reporting was put back in effect soon, which seems likely, the government will have to give us a new deadline, since the old deadline passed while this was on hold. As of early December, when this was first put on hold, the government reported that it had received less than 30% of the BOI reports which will need to be filed. With more than 70% of businesses still needing to file BOI reports when this goes back into effect, it is our hope that the government gives an adequate time to get them filed and does a massive PR campaign to alert businesses to their need to file. There is no guarantee, however, that the government will give adequate time, and many smart business owners are putting this risk behind them by filing their reports now, while the enforcement is on hold, so that they are not surprised down the road with the new deadline.