The Department of Justice (DOJ) has filed an emergency application with the Supreme Court asking it to stay the district court injunction that is preventing the government from enforcing the Corporate Transparency Act and its requirements to report beneficial ownership information (BOI).
Under the CTA, which Congress passed in 2021 as an anti-money-laundering initiative, reporting companies must disclose the identity and information about beneficial owners of the entities. For new entities incorporated after Jan. 1, 2024, reporting companies must also disclose the identity of "applicants" — defined as any individual who files an application to form a corporation, limited liability company or other similar entity.
Initially, a panel of judges on the Fifth Circuit said that "the government has made a strong showing that it is likely to succeed on the merits in defending CTA's constitutionality" and set aside the injunction. But three days later, another Fifth Circuit panel — comprised of the judges who will consider the appeal — reinstated the injunction.
In its request on Tuesday, Dec. 31, the DOJ said the government is likely to succeed in its case.
"The Act's reporting requirements are important to the government in preventing, detecting, and prosecuting crimes such as money laundering, tax fraud, and the financing of terrorism," the DOJ wrote.
"The requirements therefore fall comfortably within Congress's authority under the Commerce Clause to regulate economic activities (here, the anonymous operation of business entities) that substantially affect interstate commerce."
The AICPA, WICPA and other state CPA societies continue to urge Congress to delay the BOI reporting deadline. Read more.