Authors
Key takeaways
- Despite the Supreme Court’s stay of nationwide injunction in Texas Top Cop Shop, Inc., a separate preliminary injunction is blocking CTA enforcement
- Reporting companies under the CTA are not currently required to file beneficial ownership information with FinCEN
- FinCEN continues to accept voluntary beneficial ownership submissions from reporting companies that choose to file
- Companies should continue to monitor their obligations and reporting requirements under the CTA
On January 23, 2025, the U.S. Supreme Court issued its order in the Texas Top Cop Shop, Inc. case and stayed the nationwide injunction (issued by the U.S. District Court for the Eastern District of Texas and affirmed by the U.S. Court of Appeals for the Fifth Circuit) on the enforcement of the Corporate Transparency Act (the CTA) by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network ((FinCEN). However, because a separate nationwide injunction blocking the enforcement of the CTA by FinCEN was issued by a Texas court in a different case on January 7, 2025, reporting companies are currently not required to file beneficial ownership information with FinCEN. See Smith v. U.S. Department of the Treasury, No. 6:24-cv-00336-JDK, 2025 U.S. Dist. LEXIS 2321 (E.D. Tex. Jan. 7, 2025).
Following the Supreme Court’s stay of the Texas Top Cop Shop, Inc. injunction, FinCEN issued an alert on January 24, 2025. Specifically, FinCEN confirmed that 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 Smith v. U.S. Department of the Treasury injunction remains in place. Even so, FinCEN noted that reporting companies may continue to voluntarily submit beneficial ownership information reports.
Given the change in administration, it is unclear whether the government will continue to pursue enforcement and appeal the preliminary injunction issued in Smith v. U.S. Department of the Treasury. Companies that may be subject to the CTA’s reporting requirements should continue to monitor the alerts from FinCEN, which can be found online, as well as the litigation and appeal of Smith v. U.S. Department of the Treasury.
Client Alert 2025-028