Responding to Justice Samuel Alito’s request for their position by January 10, 2025, the plaintiffs urged the Supreme Court to reject the DOJ’s request to lift the nationwide injunction halting enforcement of the Corporate Transparency Act (CTA). They argued that pausing compliance deadlines poses minimal harm to the government, especially given its own three-year delay in implementing the law. The plaintiffs further emphasized that enforcing compliance during ongoing legal review would cause irreparable harm to businesses, citing tens of billions of dollars in unrecoverable compliance costs and violations of constitutional protections under the First and Fourth Amendments.
The DOJ petitioned the Supreme Court to overturn the injunction, which was issued by a Texas district court in December 2024, just weeks before the CTA’s initial reporting deadline of January 1, 2025. The DOJ argued that the injunction is overly broad and that the government is likely to succeed in defending the law’s constitutionality. They also asked the Court to limit the injunction to the plaintiffs involved in the case if the broader block cannot be lifted.
Passed in 2021, the CTA mandates that millions of businesses disclose their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) to combat financial crimes such as money laundering and tax evasion. While the injunction remains in effect, FinCEN has clarified that companies are not required to file BOI reports or face penalties for non-compliance, though voluntary reporting is permitted.
The CTA was designed to enhance transparency and prevent the misuse of anonymous shell companies, but the ongoing legal challenges have left many small businesses uncertain about their reporting obligations. The Supreme Court’s upcoming decision is expected to provide clarity on the law’s enforcement and the responsibilities it imposes on businesses.