UPDATE (1/5/2025): Government Appeals Corporate Transparency Act (CTA) Injunction to the U.S. Supreme Court

Well never a dull day as we follow the cases and ongoing changes to compliance requirements for the CTA.  After the back and forth regarding an injunction temporarily halting (reinstating and halting again) certain reporting requirements by a federal court, the U.S. government has appealed this injunction to the U.S. Supreme Court, aiming to preserve the enforcement of the CTA’s provisions as originally intended.

The government’s appeal signals the importance of the CTA in the broader framework of financial crime prevention. However, businesses and advocacy groups remain divided:

• Proponents argue the CTA closes loopholes that allow anonymous shell companies to operate unchecked.
• Opponents contend the law disproportionately impacts small businesses, creating costly compliance obligations and exposing sensitive personal information to potential misuse.

How Will the Supreme Court Respond?

The Supreme Court’s decision to hear the case—and potentially rule on the CTA—could have sweeping implications. A ruling in favor of the government may reaffirm the Act’s constitutionality, solidifying reporting obligations for businesses nationwide. Conversely, a decision to uphold the injunction could lead to significant legislative or regulatory amendments.

What Should Businesses Do Now?

Until the Supreme Court provides clarity, businesses should remain prepared to comply with the CTA’s reporting requirements. Here are some proactive steps to consider:

1. Identify Beneficial Owners: Gather information about individuals who meet the CTA’s definition of a beneficial owner (25% ownership or significant control).
2. Monitor Legal Updates: Stay informed about court decisions and guidance from FinCEN.

We will continue to monitor developments in this case and provide updates as the situation evolves. If you have questions about how the CTA affects your business don’t hesitate to reach out.

Stay tuned for further updates on this pivotal legal battle.

Merrick Garland, Attorney General, et al., Applicants vs. Texas Top Cop Shop, Incorporated, et al.