WASHINGTON — While the U.S. Supreme Court has lifted one nationwide injunction blocking enforcement of Beneficial Ownership Information (BOI) reporting requirements, another injunction issued in a different lower-court case is keeping the reporting requirements voluntary for now.
The Corporate Transparency Act (CTA), passed in January 2021, was written to require most companies, including laundry business owners, to file ownership information with the Financial Crimes Enforcement Network (FinCEN) in an effort to prevent illicit activities such as money laundering and drug trafficking through shell companies.
Filing reports by a Jan. 1, 2025, deadline was to be mandatory for anyone exercising substantial control or owning at least 25% of a reporting company. Companies that didn’t report could have faced civil and/or criminal penalties.
But a judge’s finding in the case of Texas Top Cop Shop v. Garland blocked the U.S. Department of Treasury from enforcing the reporting requirements and ultimately led the Supreme Court to lift a nationwide injunction upheld by an appeals court.
However, a separate nationwide injunction issued by a different Texas federal judge in Smith v. U.S. Department of the Treasury keeps the reporting requirements voluntary for now.
In an email to Editor Dave Davis of sister publication American Drycleaner (who assisted in writing this update), Milan Solarz-Patel, head of BOI compliance at FinCEN Guidance and a former IRS attorney, characterized the situation as a “legal merry-go-round.”
He notes the situation where “one nationwide injunction is lifted only to have another take its place” continues to leave businesses in limbo.
The Wall Street Journal reports there are at least seven other pending court cases that challenge CTA constitutionality.
“These lower-court injunctions have temporarily impacted BOI reporting but do not address the core constitutional issues,” Solarz-Patel asserts. “Ultimately, this legal battle will likely end up back at the Supreme Court, where reasoned legal opinions suggest the CTA is likely to be upheld as constitutional.”
While FinCEN has yet to announce a new deadline for BOI reporting, the agency confirms that companies can continue to submit their information voluntarily.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
