The Supreme Court of the United States (SCOTUS) has written the next chapter in the Beneficial Ownership Information (BOI) Report process arising out of the Corporate Transparency Act (TCA). While the requirement to file the BOI and consequences for failure to do so remain suspended at this time, SCOTUS rendered a decision yesterday, January 23, 2025, that has cleared one of the remaining hurdles to the government’s wish to move forward with BOI reporting.
SCOTUS has “granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland).”
However, this does not clear the way for the Beneficial Ownership Information (BOI) report process to go forward. There is still a standing order issued in Smith v. U.S. Department of the Treasury, Case No. 6:24-cv-336-JDK in the U.S. District Court (Eastern District of Texas Tyler Division). In that Court’s decision, consideration was given to the “differences between the arguments presented in (Garland v. Texas Cop Shop) and the present action, and the uniqueness of the parties here.” That Court found the TCA “is unprecedented in its breadth and expands federal power beyond constitutional limits. It mandates the disclosure of personal information from millions of private entities while intruding on an area of traditional state concern…plaintiffs would be irreparably harmed if forced to comply with BOI and all requirements of the TCA.”
As this next chapter in the Beneficial Ownership Information (BOI) Report unfolds, This U.S. District Court order stands, and a “preliminary injunction and stay prohibiting FinCEN from enforcing the new law” remains intact. The Court found that the plaintiffs in that case “are likely to succeed on the merits of their claim that the CTA and its implementing rule are unconstitutional.”
As a result, any required reporting company under FinCEN’s established BOI reporting requirements is not presently required to comply and provide beneficial ownership information and will not be subject to any liability for the failure to file a BOI. FinCEN’s latest update notes: “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
While the next chapter in the Beneficial Ownership Information (BOI) Report process may be perceived by many to be a victory for the CTA in the Supreme Court, the Smith v. U.S. Department of Treasury injunction and stay remain in force.
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