SNAFU TWO SCOTUS Boogaloo - Maybe (January 6, 2025)

SNAFU TWO SCOTUS Boogaloo - Maybe (January 6, 2025)

January 6, 2024

To our Clients and Friends:

SNAFU TWO: SCOTUS Boogaloo - Maybe

To review:

On December 3, 2024, Judge Mazzant issued a nationwide stay to the BOI Reporting Requirements pending the outcome of a hearing on the constitutionality of the Corporate Transparency Act, meaning no one needed to comply with the December 31, 2024 deadline to report the beneficial owners of a business entity, although FinCEN noted that voluntary reporting was available.[1]

On December 23, 2024, a panel of judges for the U.S. Court of Appeals for the Fifth Circuit granted a stay of Judge Mazzant’s stay, extending the deadline to comply with the BOI Reporting Requirements to January 13, 2025.[2]

However, just three days later a different panel of judges for the United States Court of Appeals for the Fifth Circuit in a highly unusual action stayed the stay of the stay, meaning no one needed to company with the January 13, 2025 deadline to report the beneficial owners of a business entity.[3]

Then on December 31, 2024, the Department of Justice on behalf of the US Treasury filed a 150-page Application with the United States Supreme Court requesting, in part, a stay of the nationwide stay issued by Judge Mazzant on December 3, 2024 and to assist in clearing up the stay, no stay “conflicting appellate rulings by and within the U.S. Fifth Circuit Court of Appeals’ ‘motions panel’ and ‘merits panel.’”.[4]

On January 2, 2025 the US Treasury updated its December 27, 2024 statement acknowledging the stay being put back in place and noted we are back to voluntary compliance to include a notification that “[o]n December 31, 2024, the Department of Justice, on behalf of the US Treasury, sought a stay of the injunction pending the ongoing appeal from the Supreme Court of the United States.[5]

On January 3, 2025, the US Supreme Court set a deadline of Jan. 10 at 4 p.m. ET for the plaintiffs in the case to respond to the Department of Justice request, so we should know if the initial December 3, 2024 nationwide stay issued by Judge Mazzant remains in place or if it is lifted, thereby requiring compliance with BOI’s Reporting requirements.[6]

So, for now, no one is required to comply with that portion of the Corporate Transparency Act that requires providing information relating to the beneficial ownership of covered business entities, but you can if you want.

In the event the stay us lifted, we anticipate that the January 13, 2025 filing deadline would be extended to account for the confusion over the last six weeks.

Mind you, we are a long way from an actual hearing before Judge Mazzant on the actual merits of whether or not the Corporate Transparency Act is unconstitutional or not (recall that this is what this has all been about), and there still remains the Fifth Circuit Court of Appeals’ February 28, 2025 deadline for the U.S. government’s reply brief to be filed in respect of its appeal of Judge Mazzant’s nationwide stay, the merits on which we could hear back from the Fifth Circuit on as early as March 2025 and in any event in the Spring of 2025 – that is, of course, only if the US Supreme Court stays the stay of Judge Mazzant’s nationwide stay.

We will continue to monitor this situation and provide additional updates as the situation warrants.

Stay tuned.

For further information or any questions on this issue, please contact Marvin Miller (miller@cmxlaw.com), Head of our Finance and Banking Practice Group.

Crath Miller & Xistris LLP

Offices: New York

For further information, please contact us at info@cmxlaw.com.

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[1] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex.)(Dec. 3, 2024); https://cmxlaw.com/news/beneficial-ownership-information-report-yes-you-need-to-do-this-voluntarily/

[2] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex.)(Dec. 23, 2024); https://cmxlaw.com/news/wait-what-beneficial-ownership-information-report-red-alert-you-need-to-do-this-now/

[3] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex.)(Dec. 26, 2024); https://cmxlaw.com/news/beneficial-ownership-information-report-snafu-on-hold-again-december-27-2024/

[4]Alert: Ongoing Litigation – Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.) & Voluntary Submissions [Updated January 2, 2025] https://fincen.gov/boi; See the Department of Justice Application to the US Supreme Court.

[5] Alert: Ongoing Litigation – Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.) & Voluntary Submissions [Updated January 2, 2025] https://fincen.gov/boi

[6] https://www.supremecourt.gov/docket/docketfiles/html/public/24A653.html