U.S. Supreme Court Lifts Initial Injunction Against Enforcement Of Corporate Transparency Act, But A Separate Injunction Continues To Halt Implementation
The long, winding road that has led to the Corporate Transparency Act litigation (as we discussed in our latest CTA client alert), has taken a new turn. This time, companies are driving blind. On New Year’s Day, the U.S. Department of Justice asked the U.S. Supreme Court for permission to let the law take effect while the legal dispute over its constitutionality is still pending. Yesterday, the U.S. Supreme Court unanimously agreed with DOJ. The nation’s highest Court lifted a stay on enforcement in an 8-1 decision. One might assume that the Supreme Court ruling ended the injunction issue, but a separate order issued by a different federal judge in Texas blocking enforcement of the statute nationwide remains in place.
As a result, the U.S. Financial Crimes Enforcement Network (FinCEN) issued a statement today confirming that “reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action.”
Given the Supreme Court ruling, we would ordinarily expect that the DOJ would move swiftly to have this second nationwide injunction lifted, but it is unclear what position the new Trump administration will take. If the DOJ were to seek to have the injunction lifted, we believe that it would be successful. But what happens next? The Treasury Department, like the DOJ is a part of the executive, and is currently headed by President Trump. FinCEN can act independently to set a deadline, or follow the directives of acting Secretary of Treasury David Lebryk. Or the White House can weigh in. The road ahead is uncertain on many fronts. The courts, FinCEN and the Treasury Department could all make decisions to determine when or if CTA will come into effect. We will continue to promptly provide updates on future developments.
