Corporate Transparency Act: Remains Unenforceable
On January 23, 2025, the Supreme Court stayed the injunction blocking the enforcement of the Corporate Transparency Act (CTA) based on the Texas Top Cop Shop, Inc. v. Garland appeal. However, due to an injunction issued by a different federal judge, enforcement of the CTA remains enjoined.
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As we previously reported, Judge Mazzant, a federal judge in the U.S. District Court for the Eastern District of Texas, granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland that enjoined enforcement of the CTA on a temporary basis.[1] Thereafter, a series of court decisions reversed and then reinstated the injunction. On January 23, 2025, the U.S. Supreme Court granted a stay of the Texas Top Cop Shop injunction.[2]
However, on January 7, 2025, Judge Kernodle, another federal judge in the U.S. District Court for the Eastern District of Texas, granted a separate nationwide preliminary injunction in Smith v. U.S. Department of the Treasury.[3] The Smith nationwide injunction remains in effect as of the date of this client alert.
In response, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued the following statement:
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
The result is that reporting companies still do not have to comply with CTA reporting obligations. However, a final decision regarding the constitutionality of the CTA remains subject to the pending expedited appeal with the Fifth Circuit. Oral arguments are scheduled for March 25, 2025. Until a final ruling is issued regarding the CTA’s enforceability, reporting companies should continue to be alert for updates regarding court cases and FinCEN announcements.
For additional information or assistance regarding the CTA, contact Jon Katona, Patrick Murphy, Samantha Blank or Madison Mueller.
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For additional information on the CTA, please see our previous publications:
- Corporate Transparency Act: Back in Effect, with Deadline Extensions
- Corporate Transparency Act: Nationwide Injunction and Next Steps
- Court Issues Nationwide Injunction Against Enforcement of the Corporate Transparency Act Reporting Deadline
- Filing Deadline Approaches: The Corporate Transparency Act
- The Corporate Transparency Act Found Unconstitutional for Specific Plaintiffs
- The Corporate Transparency Act is in Effect: What You Need to Know
- Corporate Transparency Act Effective Date Approaches
You can also visit FinCEN’s BOI webpage.
[1] Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478-ALM (E.D. Tex. Dec. 3, 2024).
[2] McHenry v. Texas Top Cop Shop, Inc., et al., U.S., No. 24A653 (2025).
[3] Smith v. Dep’t of the Treasury, No. 6:24-cv-00336 (E.D. Tex. Jan. 8, 2025).