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Corporate Transparency Act Still Blocked
Despite Supreme Court Decision
The saga of confusing Corporate Transparency Act (CTA) litigation continues, but the guidance remains the same: companies are not currently obligated to file Beneficial Ownership Information (BOI) reports with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The U.S. Supreme Court has granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas. However, a separate nationwide order issued by a different federal judge in Texas still remains in place.
Let’s recap how we got here. The CTA, enacted on January 1, 2021, requires most business entities to file a BOI report with FinCEN, unless the entity is exempt from reporting under one of the CTA’s exemptions. The CTA imposed deadlines on companies to file their BOI reports, with a significant deadline for many companies being January 1, 2025.
On December 3, 2024, the United States District Court for the Eastern District of Texas issued a preliminary injunction prohibiting the enforcement of the CTA (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). The District Court’s decision was appealed to the Fifth Circuit Court of Appeals, and on December 23, 2024, a motions panel of the Appeals Court granted a stay of the injunction, causing the preliminary injunction to be lifted and the deadlines reinstated. On December 26, 2024, the merits panel vacated a portion of the decision of the motions panel, effectively reinstating the preliminary injunction pending resolution of the appeal.
The government appealed the merits panel decision to the U.S. Supreme Court and, on January 24, 2025, the Supreme Court issued an order staying the nationwide injunction issued in the Texas Top Cop Shop case. This decision would have had the effect of reinstating the CTA's reporting requirements and deadlines if it were the only injunction in place. However, a separate injunction against the enforcement of the CTA's reporting rules was issued by a different judge of the U.S. District Court for the Eastern District of Texas in Smith v. U.S. Department of the Treasury on January 7, 2025, prior to the Supreme Court’s decision. The Supreme Court’s ruling in Texas Top Cop Shop does not affect the injunction issued by the U.S. District Court for the Eastern District of Texas in the Smith case.
While the Smith stay remains in effect, FinCEN cannot enforce the CTA and its reporting deadlines. FinCEN confirmed this position in an updated alert issued on January 24, 2025. Businesses that already filed an initial BOI report need not file any additional reports, including any amended or updated reports, until a final resolution is reached in the various CTA cases. Businesses that have not yet filed an initial BOI report should monitor for further updates and be prepared to file a report quickly should the Smith stay be ultimately lifted.
We have a team of attorneys who are prepared to assist with any questions you may have regarding the CTA. If you have questions regarding the impact of the stay on your business, please contact us.
Brienne T. Marco
Member and Chair, Corporate Department
304.720.4060
bmarco@spilmanlaw.com
Joseph C. Unger
Senior Attorney
304.340.3850
junger@spilmanlaw.com
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