The CTA, SCOTUS and Stays of Stays of Stays Ad Infinitum

blog

The CTA, SCOTUS and Stays of Stays of Stays Ad Infinitum

The CTA was enacted to require beneficial ownership filings by corporations and other entities, as an effort to combat money laundering and tax fraud by requiring ultimate beneficial ownership filings to be disclosed. 
Richard P. Swanson, Esq.
Written by: By Richard P. Swanson, NYCLA President-Elect
Published On: Jan 23, 2025
Category: News & Insights

The Supreme Court entered an order today staying the Fifth Circuit’s stay of enforcement of the Corporate Transparency Act, or CTA.  The Fifth Circuit’s en banc decision stayed enforcement of another stay by a Fifth Circuit three-judge panel staying a District Court decision which itself stayed enforcement of the CTA by way of a nationwide preliminary injunction.  Got that?  We have a stay of a stay of a stay of a stay.  Is it any wonder that our judiciary has fallen into disrepute?  How could John (or Jane) Q. Public even understand such a state of affairs, much less respect it?  It is, plain and simple, just a bad judicial look. 

The CTA was enacted to require beneficial ownership filings by corporations and other entities, as an effort to combat money laundering and tax fraud by requiring ultimate beneficial ownership filings to be disclosed.  It had many nuances to it, given the multitude of different legal business structures and their potential complexity, but that’s the gist.  Filings were due on December 31, 2024.

A District Court in Texas issued a nationwide injunction staying enforcement of the CTA.  I won’t bore you with the reasons.  If you want to know the reasons read the opinion.  Nationwide injunctions are a matter of some controversy.  Republicans used to hate them when they were sought by the Obama Administration, but now when they can choose to have their cases heard by particular conservative judges it turns out they now love them.

An immediate appeal was taken to the Fifth Circuit, which stayed the District Court’s stay, putting the CTA back in place, but the timing was so close to Christmas that a new compliance date had to be set.  FINCEN did this by taking the position they wouldn’t take any action for noncompliance so long as filers made their initial filings by January 13, 2025.  Within just a few days the en banc Fifth Circuit vacated its panel ruling, voiding any need to file by January 13 or any other date, and thus staying the stay of the District Court’s stay.

Now the Supreme Court has stayed the Fifth Circuit’s en banc ruling, staying the stay of the stay of the stay, and putting the CTA’s filing requirement back in place.  But of course it is now past both December 31 and January 13, so a new compliance date will have to be set.  And, since it is also past January 20, a new administration will be setting the date.  Since this administration can be expected to be hostile to the idea of any CTA filing requirement, it is unclear what filing date, if any, will actually be set.  But the statute, with its December 31 filing date, remains on the books. 

This whole set of circumstances is just a bad look for the judiciary, and for the concept of the rule of law as a comprehensible set of rules that one should at least attempt to follow.

   

The views expressed here are those of the author, and do not necessarily represent or reflect the views of NYCLA, its affiliates, its officers, or its Board.


Would you like to submit a blog post?  Please email your blog post ( 700 – 1000 words) to acutts@nycla.org for review and publication.