The Corporate Transparency Act (CTA) faces uncertainty as the Department of Justice filed an application with the U.S. Supreme Court on December 31, 2024, seeking to enforce the beneficial ownership information (BOI) reporting requirements that had been previously blocked. The government argued for a stay of the injunction, emphasizing that Acts of Congress should remain in effect until a final decision by the Supreme Court. The Fifth Circuit initially granted a stay but later vacated it, causing confusion for business owners and advisors.
In Texas Top Cop Shop, Inc., et al. v. Garland, et al., U.S. District Court Judge Mazzant granted a preliminary injunction, blocking the U.S. Department of Treasury from enforcing the CTA’s reporting requirements nationwide in response to a request by the National Federation of Independent Business (NFIB). The government appealed the decision to the Fifth Circuit which initially granted a stay but later reversed it, allowing the injunction to be back in play. FinCEN extended the reporting deadline in response to the rulings.
NFIB and other plaintiffs requested a rehearing en banc in the Fifth Circuit, which was expedited with the oral arguments scheduled for March 25, 2025. Another case in Alabama found the CTA unconstitutional and barred enforcement against the plaintiffs but did not enjoin enforcement against others, with oral arguments heard in October 2024. Two other circuits also have CTA case appeals pending in their dockets, adding to the legal complexities surrounding the act.
The government is asking the Supreme Court to stay the district court’s injunction in full while the matter is appealed, potentially requiring BOI reporting as it was before the original injunction. Alternatively, the government requested a more limited stay to protect respondents and NFIB members identified in the complaint. The Supreme Court may consider treating the application as a petition for a writ of certiorari before judgment, raising questions about the district court’s authority to issue a universal injunction.
The application for the Supreme Court’s intervention raises uncertainties about the scope of lower court injunctions and the constitutionality of the CTA, highlighting the potential for larger implications beyond this case. The resolution of this case could have a significant impact on future lawsuits challenging federal laws and the power of district courts to issue nationwide injunctions. While the Supreme Court’s decision to grant certiorari is not guaranteed, the case’s importance and complexity suggest a potential for further legal battles and implications.
