Supreme Court Lifts BOI Injunction

Supreme Court Lifts Injunction on BOI Reporting Requirements

The Supreme Court recently issued a stay on a nationwide injunction that had temporarily blocked the enforcement of beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). This decision means that the federal government can now enforce these rules while the case continues to proceed through the courts.

However, it remains uncertain how the Financial Crimes Enforcement Network (FinCEN), the agency responsible for enforcing BOI reporting, will respond to the ruling. The stay will remain in effect until the Fifth Circuit Court of Appeals takes further action, and the case may ultimately return to the Supreme Court for additional review.

Dissenting Opinion

Justice Ketanji Brown Jackson dissented from the Supreme Court’s decision, arguing that the injunction should have stayed in place during the ongoing appeals process. In her dissent, she stated that the government had not demonstrated that delaying implementation would cause significant harm.

Background on BOI Reporting Requirements

The CTA, passed in 2021 as part of an anti-money laundering initiative, requires certain companies to disclose the identities and details of their beneficial owners. Reporting companies must also disclose the identities of “applicants” for entities formed after January 1, 2024. FinCEN estimated that approximately 32 million small businesses would be subject to these reporting requirements.

Failure to comply with the requirements can result in severe penalties, including fines of up to $10,000, daily fines of $591, and up to two years of imprisonment for willful violations. The initial deadline for most reports was January 1, 2025, but FinCEN had extended this to January 13, 2025, before the injunction temporarily nullified the deadline.

Developments in the Courts

The case originated in Texas Top Cop Shop, Inc. v. Garland, where a federal district court issued the original injunction preventing enforcement of the BOI requirements. After the Department of Justice (DOJ) appealed, a Fifth Circuit panel initially lifted the injunction, only for a different panel to reinstate it days later. The DOJ then sought emergency relief from the Supreme Court, which led to the stay of the injunction.

Oral arguments in the Fifth Circuit are scheduled for March 25, 2025.

Next Steps

The Supreme Court’s decision has left businesses and advisors awaiting further guidance from FinCEN. As Melanie Lauridsen, the AICPA’s vice president of Tax Policy & Advocacy, noted, specifics and timing on BOI reporting deadlines are still pending.

The AICPA and other professional organizations continue to advocate for delayed implementation, emphasizing the need for clarity and additional time for businesses to comply with the new regulations.