Current Status of BOI Reporting

In a significant development for beneficial ownership reporting, the Department of Justice has filed an appeal and motion to stay the second injunction blocking the Corporate Transparency Act (CTA). Here's what businesses need to know about this latest twist in the ongoing legal saga.

The Two Injunctions in the court

1. First Injunction (Texas Top Cop Shop): Lifted by Supreme Court on January 23, 2025

2. Second Injunction (Smith v. Treasury): Currently in effect, issued January 7, 2025

   • Blocks nationwide enforcement of BOI reporting

   • Now being appealed by the government

New Development: Government's Appeal

On February 5, 2025, the Department of Justice filed both:

• A notice of appeal to the Fifth Circuit

• A motion to stay the injunction pending appeal

Key Elements of the Government's Position

Proposed 30-Day Extension

If the stay is granted, FinCEN has indicated it will:

• Extend the CTA compliance deadline by 30 days

• Use this period to assess potential modifications to reporting requirements

• Consider relief for low-risk entities while prioritizing national security concerns

Legal Arguments

The government contends:

• Congress acted within its Commerce Clause authority

• The CTA is necessary for combating financial crime

• The public interest favors maintaining the reporting system

What This Means for Businesses

Immediate Impact

• BOI reporting requirements remain paused

• No penalties for non-compliance while injunction stands

• Voluntary filing still permitted

Looking Forward

• Court decision on stay motion expected soon

• Potential 30-day extension if stay granted

• Possible modifications to reporting requirements

Strategic Considerations

While we await further developments, businesses should:

1. Maintain preparation for potential quick implementation

2. Monitor legal developments

3. Consider voluntary filing options

4. Review beneficial ownership documentation

Our Perspective

The ongoing legal challenges demonstrate the complexity of implementing nationwide corporate transparency measures. However, the government's willingness to consider modifications to the requirements while maintaining the core objectives of the CTA suggests a potential path forward that balances compliance burden with national security needs.