Supreme Court Considers Staying Injunction on Corporate Transparency Act
The legal battle over the implementation of the Corporate Transparency Act and its beneficial ownership reporting requirements is now taking place in the Supreme Court.
The court is considering an application filed by the Department of Justice on behalf of the Financial Crimes Enforcement Network (FinCEN) to stay a national injunction that was issued by a Texas district judge in early December and paused implementation of the act, The Wall Street Journal (WSJ) reported Friday (Jan. 10).
Justice Samuel Alito asked the plaintiffs to respond to FinCEN’s motion by Friday afternoon, according to the report.
The Corporate Transparency Act, which was passed in 2021 to help track illicit money, requires 32 million small businesses to file beneficial ownership information with FinCEN or face the possibility of penalties, the report said.
The law faces at least seven lawsuits across the country, and its first filing deadline has shifted several times over a period of weeks, per the report.
A FinCEN spokesperson said in the report: “The government continues to believe that the CTA is constitutional and will continue defending the law as necessary.”
The lead attorney representing the plaintiffs in the Texas case, Caleb Kruckenberg, told the WSJ that the team at the nonprofit public-interest law firm Center for Individual Rights is preparing a response to be submitted to Alito on Friday.
“Because of the kind of information we are talking about, if people are concerned, I would advise people to not file,” Kruckenberg said, per the report.
FinCEN said Dec. 27 that it was giving many small businesses more time to file beneficial ownership information after a Dec. 23 federal court of appeals decision that reinstated the reporting requirement.
When announcing the change in an alert, FinCEN said “the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect.”
It was reported Dec. 1 that about 30% of small businesses had reported beneficial ownership information to FinCEN. About 9.5 million reports were filed at that point and 1 million new reports were being filed each week.
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