Next steps in the Corporate Transparency Act court case
As of now, there have been no public announcements regarding next steps. However, in conversations with two Treasury Department officials, it was made clear that the decision will be appealed and a stay of judgment request will be filed with the district court.
Stay of judgment: If the Treasury does appeal the district court's decision to the Eleventh Circuit Court of Appeals, it will also most likely request a stay of judgment while the appeal is processing. A stay of judgment is exactly what it sounds like — the decision is paused or "stayed" for a specific period of time, usually while the appeal process takes place.
If the Treasury applies for a stay, and it is granted, the district court's order to cease enforcement of the CTA against the NSBA and its members would be lifted. If the stay isn't granted at the district court level, the Treasury will likely appeal that decision to the Eleventh Circuit Court of Appeals.
Appeal the decision: The Treasury is expected to appeal the summary judgment in its entirety to the Eleventh Circuit Appeals Court. The appeals court would then likely consider the district court's decision on its merits. Keep in mind, the district court did not consider the facts of the case, but instead the court issued a summary judgment ruling on the law.
No matter how the Eleventh Circuit Court of Appeals rules, this case is likely to ultimately end up being presented to the U.S. Supreme Court.
What the CTA ruling means for small businesses
Not much has changed for most small businesses. The summary judgment applies to somewhere between 0.1% – 0.2% of the over 30 million firms that FinCEN estimates will be required to file initial BOI reports in 2024, based on the NSBA's membership as of March 1, 2024.
As of this article's publication date, no other lawsuits against the CTA are in progress. While multiple organizations — such as the AICPA, the American Bar Association and the American Bankers Association — have all written letters requesting a year's delay in CTA enforcement, none have stated an interest in bringing a suit. Likewise, neither Congress nor the Treasury has entertained a delay beyond Jan. 1, 2024.
Given the extremely limited reach of the ruling, it's doubtful that the Treasury and its FinCEN arm will issue guidance universally suspending CTA enforcement while the appeals process plays out, beyond the FinCEN statement issued on March 4, 2024.
Many believe that all reporting companies facing CTA deadlines should seriously consider filing, even if the Federal District Court's ruling covers them. Businesses that fail to file in time to meet their CTA deadlines are betting on the NSBA prevailing in the courts. Meanwhile, if the UST prevails, these businesses will potentially face significant civil fines, interest, and penalties, as well as possible criminal penalties, including jail time.
Choosing to file means potentially losing their filing fees and any cost incurred if they decide to use an advisor. However, filing provides peace of mind – staying in CTA compliance means there's no chance of facing more stringent financial and criminal penalties for failure to file.