The Trump Administration made two moves this week which indicate its intent to enforce the Corporate Transparency Act and reinstate the BOI reporting requirements for small businesses.
First, the newly appointed head of the Justice Department authorized the filing of a brief with the Fifth Circuit in the Texas Top Cop Shop case arguing that the CTA should be enforced because of the it can curtail an estimated $300 billion in domestic tax crimes. Past congressional efforts to curb money laundering has only been somewhat helpful, but there is still a “significant gap” because small businesses don’t report this sort of ownership information to the federal government, and there is inconsistency among the states as to what they require to be filed, the brief said.
Second, the newly revamped Justice Department filed an appeal of the Smith case, which is the one remaining court decision which is currently holding up enforcement of the Corporate Transparency Act. The Smith appeal was also filed with the Fifth Circuit, which might set the hearing on that appeal for the same day that it is hearing the Texas Top Cop Shop case, on March 25th. If the Fifth Circuit decides both of these cases at once, it would determine whether the CTA is back “on” or not. If back on, the BOI reporting requirements would instantly be back in place and the government would need to announce a new deadline, since the previous deadline expired while this was on hold on appeal.
Businesses need to prepare for the CTA to go back into effect soon and file their BOI reports because:
- The US Supreme Court tipped its hand in showing a likelihood of finding the CTA enforceable and constitutional (see Notes, below);
- The Trump administration is indicating it supports enforcement of the CTA to fight money laundering and save money; and
- The Fifth Circuit has indicated it likely finds the CTA enforceable (see Notes, below).
Get your reports filed, or prepare for a panic rush to file if you have not filed and the CTA goes back in effect soon.
Notes:
The Texas Top Cop Shop case is the appeal of a Texas federal judge’s nationwide injunction prohibiting enforcement of the CTA. It is currently pending before the Fifth Circuit. The Fifth Circuit has kept enforcement of the CTA on hold while it considers the appeal. An oral argument is scheduled March 25, 2025 on this case, and we can expect a decision shortly afterwards, as this is an accelerated appeal. In late December 2024, the Fifth Circuit first indicated it found cause to keep the CTA in effect while the appeal was pending, only to reverse itself a few days later by putting it on hold and accelerating a very fast appeal.
The Smith case is another appeal of a different Texas federal judge’s similar nationwide injunction prohibiting enforcement of the CTA. As of this week, this decision has also been appealed to the Fifth Circuit.
The government has appealed the Fifth Circuit’s decision to keep the CTA on hold while it decides the Texas Top Cop Shop case to the US Supreme Court. The Supreme Court issued an order in January 2025 overruling the Fifth Circuit, making the CTA enforceable again. However, because the Smith case nationwide injunction was still out there, the CTA remained on hold because that case was not before the US Supreme Court. In its order, some of the justices indicated they were concerned with whether local federal district court judges have the power to issue nationwide injunctions, like those in these two cases.
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