The US Supreme Court’s decision to pause an injunction blocking the Corporate Transparency Act (CTA) has added another layer of uncertainty for businesses, even as enforcement of the law remains on hold.
The CTA, a key regulation requiring around 32 million US businesses to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), remains entangled in litigation.
The Supreme Court granted the Justice Department’s request to stay the injunction—the first to block the CTA nationwide—while litigation over the constitutionality of the law continues.
The case will return to the US Court of Appeals for the Fifth Circuit for oral arguments in March.
Meanwhile, enforcement of the law is still delayed by a separate case, Smith v. US Department of Treasury. In that case, the US District Court for the Eastern District of Texas issued a partial injunction against the CTA and paused the reporting deadline nationwide.
Seth Ashby, a corporate law expert at Varnum LLP, reassured businesses that the Supreme Court’s decision won’t immediately impact compliance. “The government has already indicated it will extend compliance deadlines, but resolving the Smith case is critical,” he said.
The legal uncertainty has left businesses in limbo as they await clarity on how and when the CTA’s reporting requirements will take effect.
Source: Bloomberg Law
