The Supreme Court Enters the CTA Fight
January 24, 2025
On Thursday, January 23, 2025, the United States Supreme Court issued an order granting the government’s motion to stay the nationwide injunction against the Corporate Transparency Act (“CTA”) in Texas Top Cop Shop, Inc. v. McHenry (formerly, Texas Top Cop Shop, Inc. v. Garland). But that doesn’t mean the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) is now free to enforce the provisions of the CTA. Another judge in the Eastern District of Texas has issued an order in a separate case, Smith v. United States Department of the Treasury, enjoining the Treasury from enforcing the CTA against the Plaintiffs and their related entities and staying the effective date of the Reporting Rule. The stay applies nationwide and effectively “sets aside” the rule until the case is decided.
FinCEN issued an alert on January 24, 2025, providing an update on the cases above and stating that reporting companies “are not subject to liability” if they fail to file the required information while the Smith order remains in effect. The following disclaimer remains on FinCEN’s e-filing site:
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.
We continue to monitor and report on developments related to the CTA and its implementing regulations. Please reach out to Stephanie Renner, Justin Harrison, or your primary Jackson Kelly contact for questions or advice regarding your obligations under the CTA.