In a last-ditch effort to revive beneficial ownership information reporting requirements for small businesses, the federal government is asking the Supreme Court to reverse an injunction on the Corporate Transparency Act ordered just days before the reporting deadline.
On December 31, 2024, the U.S. Attorney General and the Department of Treasury petitioned the Supreme Court to lift a December 26 Fifth Circuit Court of Appeals injunction that takes small-business owners off the hook to file a beneficial ownership information report.
In its Supreme Court application, the federal government argues that the injunction will inflict irreparable harm. Conversely, reversing the injunction will have a minimal impact on small businesses, as beneficial ownership information reporting is fairly quick, simple and does not include any fees.
“(The injunction) prevents the government from executing a duly enacted act of Congress, impedes efforts to prevent financial crime and protect national security, undermines the United States’ ability to press other countries to improve their own anti-money laundering regimes and severely disrupts the ongoing implementation of the act,” the government said. “By contrast, the act imposes only minimal burdens on respondents.”
Several outcomes are possible. If the Supreme Court punts on the case or rules in favor of the plaintiffs, the beneficial ownership information report injunction remains in place. The high court could either lift the injunction in its entirety or apply it to only the plaintiffs, in which case new deadlines for reporting will likely be established.
In the Fifth Circuit, the merits panel faces a similar task. It could either reverse the district court’s finding and lift the injunction or affirm the decision and keep the injunction in place as the case plays out. The appellate court could also choose to narrow the injunction. That decision is not expected until spring.