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News

Supreme Court Lifts CTA Injunction, but Enforcement Remains on Hold

By:
Emma Slack-Jorgensen
Published Date:
Jan 24, 2025

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The U.S. Supreme Court has lifted a nationwide injunction on the Corporate Transparency Act (CTA), which mandates businesses to disclose beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN), according to a report by Accounting Today. The CTA aims to combat financial crimes like money laundering and terrorism financing by improving transparency around corporate ownership.

Despite this decision, enforcement of the CTA remains halted. This is because, while the Supreme Court’s ruling addressed the injunction in the Texas Top Cop Shop case, a separate nationwide injunction by another Texas district court in the Smith v. U.S. Department of Treasury case remains effective. The Texas Public Policy Foundation, representing the plaintiffs in the second case, stated their arguments differ and are unaffected by the Supreme Court’s decision. 

Supreme Court Justice Neil Gorsuch concurred with lifting the original injunction, calling for clarity on the scope of district court authority. Justice Ketanji Brown Jackson dissented, arguing the appeals process should run its course without Supreme Court intervention, Accounting Today reported.

There were also varying reactions to the Supreme Court order. Accounting Today reported that the National Federation (NFIB) of Independent Business, which was behind the lawsuit in the Texas Top Cop Shop case, expressed its disappointment about the decision in a Jan. 23 statement. 

"Today's decision is a setback for small business," noted Beth Milito, vice president and executive director of NFIB's Small Business Legal Center. "Hopefully, Treasury recognizes the chaos that will ensue by requiring 32 million small businesses to imminently file their BOI information while the constitutionality of the reporting requirements is determined. As the next steps become clear, NFIB will inform small businesses on how to proceed."

In contrast, Accounting Today said that corporate transparency advocates were happy about the Supreme Court's decision. "The resumption of enforcement of the CTA is a blow to fentanyl dealers, human traffickers, terrorists, corrupt foreign leaders and other criminals that use anonymous companies to launder the proceeds of their illegal activities," noted Scott Greytak, director of advocacy for Transparency International U.S., in a statement. 

FinCEN has reiterated that reporting remains voluntary during the injunction. Businesses will not face penalties for noncompliance while the nationwide stay persists. 

"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," FinCEN stated. "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."

The AICPA also reminded companies to be ready to report BOI information just in case the injunction is lifted. "The AICPA maintains its advice that those assisting clients with BOI report filings gather the required information from clients and be prepared to file the BOI report if the injunction is lifted again," the AICPA said in a statement