Supreme Court to Decide on Corporate Transparency Act Injunction For the first time, the U.S. Supreme Court has been asked to rule on the Corporate Transparency Act (CTA) and the legitimacy of a nationwide injunction blocking its enforcement.

For the first time, the U.S. Supreme Court has been asked to rule on the Corporate Transparency Act (CTA) and the legitimacy of a nationwide injunction blocking its enforcement. At the heart of the dispute is whether a district court had the authority to halt the CTA’s implementation across the entire country. The Department of Justice (DOJ) is urging the Supreme Court to overturn the injunction, arguing that federal laws should remain in effect while legal challenges are being resolved.

The CTA, designed to combat illicit financial activities, mandates that certain business entities disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). However, a preliminary injunction issued by U.S. District Court Judge Amos Mazzant in Texas put the law’s enforcement on hold. The National Federation of Independent Business (NFIB), which brought the lawsuit, contends that the reporting requirements are unconstitutional and burdensome for small businesses.

The DOJ argues that the nationwide injunction is overly broad and undermines the enforcement of an essential transparency law. In its Supreme Court petition, the DOJ maintains that congressional enactments should be presumed valid until courts reach a final decision. Furthermore, it warns that the injunction has created confusion among businesses, many of which had already begun compliance preparations before the ruling.

The legal battle has been marked by conflicting court decisions. By December 2024, the Fifth Circuit initially granted the DOJ’s request to stay the injunction, allowing CTA enforcement to proceed. However, a panel of the same court later reversed the decision, reinstating the injunction and preventing FinCEN from implementing the law. As a result, businesses are left uncertain about their obligations, especially with the original BOI reporting deadline set for January 1, 2025. In response, FinCEN extended the deadline to January 13, 2025, and later announced exemptions for businesses if the injunction remains in place.

The Supreme Court now faces two critical questions: Should the injunction be entirely lifted, or should it be limited only to NFIB and its members? The DOJ is also pushing the Court to consider its petition as a writ of certiorari before judgment, which would give the Supreme Court direct jurisdiction over whether district courts can issue nationwide injunctions. The outcome of this case could have far-reaching implications, shaping future challenges to federal laws and redefining the limits of judicial authority.

Meanwhile, legal challenges to the CTA continue in other courts. A federal judge in Alabama recently ruled the CTA unconstitutional, arguing that it exceeds Congress’s authority. However, that ruling only applies to the plaintiffs in that case. Additional appeals concerning the CTA are pending before the Fourth and Ninth Circuit Courts of Appeals, adding to the uncertainty surrounding the law’s future.

The Supreme Court has scheduled oral arguments for March 25, 2025, in the NFIB case. While the Court is not obligated to grant the DOJ’s request or even hear the case, its decision could have significant consequences beyond the CTA, setting a precedent on when district courts can issue nationwide injunctions. For now, the fate of the Corporate Transparency Act remains in legal limbo, with businesses and regulators awaiting clarity on its enforcement.