Supreme Court Stays District Court Injunction Against Filing Requirements of Corporate Transparency Act (1/24/25; 1/26/25)

Corporate Transparency Act Case Overview

The first Corporate Transparency Act ("CTA") case to reach the Supreme Court involved a preliminary skirmish over a district court’s universal injunction. This injunction prevented the Treasury and the IRS from enforcing the filing requirements of the Corporate Transparency Act (“CTA”). For more details, see Texas District Court Enjoins the Corporate Transparency Act Nationwide (Federal Tax Procedure Blog (12/5/24; 1/6/25), here, as well as the articles linked below.

Legal Proceedings

The district court action consisting of holding the CTA unconstitutional and enjoining the CTA spawned the following:

1.   Appeal on the Merits: The appeal on the merits to the Fifth Circuit is currently pending expedited consideration.

2.   Requests to Lift the Injunction: Requests to lift the injunction filed (i) in the Fifth Circuit, which ultimately denied the request, and then (ii) in the Supreme Court where it was docketed as No. 24A653, here.

Supreme Court Order

On January 23, 2025, the Supreme Court entered an order on the docket (No. 24A653), here:

Application (24A653) for stay presented to Justice Alito and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24–cv–478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought. Should certiorari be denied, this stay shall terminate automatically. In the event certiorari is granted, the stay shall terminate upon the sending down of the judgment of this Court. Justice Gorsuch concurring in the grant of stay. (Detached Opinion). Justice Jackson dissenting in the grant of stay. (Detached Opinion)

Media Coverage

Major news reporting services have posted notices and discussions about the Supreme Court's action, including:

• Adam Liptak, Supreme Court Revives Law Meant to Fight Money Laundering (NYT 1/23/25), here.
• Justin Jouvenal, Supreme Court clears way for corporate transparency law to take effect (WAPO 1/23/25), here.
• Amy Howe, Justices Allow Enforcement of Corporate Transparency Law to Go Forward (SCOTUSblog 1/23/25), here.

Compliance Status

Currently, the Government can require compliance. However, given the interim injunction in effect until yesterday, many did not file before December 31, 2024. The Government will likely not penalize those who did not file before a revised filing date is set. 

Separate Opinions by Gorsuch and Jackson

As to the short opinions of Justices Gorsuch and Jackson, I copy and paste Amy Howe’s summary:

Justice Neil Gorsuch agreed with the decision to grant the government’s request. He noted, however, that he would take up the universal-injunction question and resolve it “definitively.”

Jackson disagreed with the decision to put Mazzant’s order on hold. Even if the government is correct that the Corporate Transparency Act is likely constitutional, she explained, the government has not shown that this is the kind of urgent situation warranting the court’s intervention – both because the 5th Circuit has fast-tracked the government’s appeal and because the government initially moved slowly to implement the law. “The Government,” she concluded, “has provided no indication that injury of a more serious or significant nature would result if the Act’s implementation is further delayed while the litigation proceeds in the lower courts.”

Current Status of CTA Obligations

I am not sure about the status of the filing requirement now. Technically, the Government can require compliance, given the interim injunction I expect that many did not file before 12/31/24 and that the Government will not penalize those who did not file before some yet to be set revised filing date. 

Added 1/26/25 11:00am: Also making the point that filing will not be subject to penalty in any event before a yet to be announced filing date. John Woolley & Tristan Navera, Corporate Transparency Act’s Fate Unclear After High Court Order (BloombergLaw 1/24/25), here.

 

Note: I used Microsoft’s AI tool, Co-Pilot, in revising my original draft of this blog. I significantly revised Co-Pilot’s offering. Also, the links to the NYT and WAPO articles used the share as gift feature, so hopefully they permit readers to read without encountering a paywall.