The Supreme Court of the United States (SCOTUS) recently heard an emergency appeal from the U.S. Department of Justice regarding the enforcement of the Corporate Transparency Act (CTA) and the Business Ownership Information (BOI) Rule. SCOTUS ruled in favor of the government, listing an order that had mandated enforcement of the CTA and BOI Rule in a specific case. However, a nationwide injunction from another court continues to block enforcement of these regulations. As a result, reporting companies are not currently required to file beneficial ownership information reports with the Financial Crimes Enforcement Network (FinCEN). Nevertheless, they may still choose to voluntarily submit these reports while the legal challenges are resolved.
FinCEN recently issued the following impact statement: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
In 2021, CTA became a law designed to enhance transparency and prevent the illicit use of anonymous shell companies. The CTA requires the FinCEN, a bureau within the Treasury Department, to enforce the law by collecting beneficial ownership information from reporting entities and beneficial owners.
In December 2024, the 5th Circuit Court of Appeals questioned the constitutionality of the CTA and the BOI Rule, blocking the government from enforcing the law. Litigation is ongoing, and the court is set to hear oral arguments on the CTA’s constitutionality on March 25, 2025. In the meantime, reporting entities and companies may choose to comply voluntarily.
On Jan. 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). However, a separate nationwide injunction from another federal judge in Texas (Smith v. U.S. Department of the Treasury) remains in effect. As a result, reporting companies are still not required to file beneficial ownership information with FinCEN, despite the Supreme Court’s decision in Texas Top Cop Shop. Companies are also not liable for failing to file this information while the Smith injunction is in place. Yet, they may still choose to voluntarily submit beneficial ownership information reports.
The BOI Reporting Rule and the CTA are currently the subject of pending litigation. There may be additional litigation updates at the time this article is published. NAR will continue to provide additional updates and information on the law. For the latest updates, please visit FinCEN’s Beneficial Ownership Information page (https://fincen.gov/boi).
