Yesterday afternoon, the US Supreme Court (SCOTUS) issued a highly anticipated decision with respect to the reporting requirements and enforcement of the Corporate Transparency Act (31 U.S.C. § 5336, the CTA). As summarized below, a District Court previously issued a nationwide preliminary injunction, suspending the enforcement of the CTA and its reporting requirements and related deadlines. Ruling in favor of the government, SCOTUS stayed (i.e., lifted) this preliminary injunction. However, for the reasons set forth below (including a new challenge to the CTA), the CTA’s reporting requirements remain voluntary and reporting companies are not subject to liability if they fail to file a Beneficial Ownership Information Report (BOIR).
The CTA, which went into effect on January 1, 2024,[1] requires a broad range of corporations, limited liability companies, and other entities (reporting companies) to file Beneficial Ownership Information Reports (BOIRs) with the Financial Crimes Enforcement Network of the US Department of the Treasury (FinCEN).
As discussed in our most recent Client Alert on this topic, on December 3, 2024, the US District Court for the Eastern District of Texas issued a nationwide preliminary injunction that suspended the enforcement of the CTA and its BOIR requirements, including the BOIR compliance deadlines,[2] due to the CTA being “likely unconstitutional” and “outside of Congress’s power.”[3] The Biden administration’s Department of Justice immediately filed an appeal with the US Court of Appeals for the Fifth Circuit (the Fifth Circuit) and separately sought a stay of the preliminary injunction pending that appeal.
The status of the CTA has been undergoing rapid-fire change ever since.
On December 23, 2024, a motions panel of the Fifth Circuit granted to the Department of Justice a stay of the district court’s preliminary injunction pending the outcome of the appeal of the district court’s order. The Fifth Circuit motions panel’s order also expedited the appeal to be heard at the next available oral argument date. Oral arguments are currently scheduled for March 25, 2025. FinCEN immediately posted on its website notice that reporting companies were once again required to file BOIRs and indicated the new filing deadlines for doing so. However, on December 26, 2024, a merits panel of the Fifth Circuit issued an order vacating the Fifth Circuit motions panel’s December 23, 2024 order granting a stay of the preliminary injunction.
On December 31, 2024, the Biden administration’s Department of Justice sought a stay of the injunction pending the ongoing appeal from SCOTUS.
Yesterday, SCOTUS granted a stay of the district court’s nationwide preliminary injunction pending the disposition of the appeal in the Fifth Circuit, which, absent another court decision discussed below, would again allow FinCEN to enforce the CTA and its BOIR requirements.
The stay granted by SCOTUS yesterday is a hollow victory for the government. On January 7, 2025, a different district court in Texas also stayed the reporting requirements of the CTA during the pendency of a different lawsuit.[4] In its ruling imposing a nationwide preliminary injunction, the Smith court characterized the CTA as a law “unprecedented in its breadth [that] expands federal power beyond constitutional limits.”[5] The Trump administration’s Department of Justice has not yet appealed the Smith court’s stay. That appeal, if filed, would be heard by the Fifth Circuit as well.
Today, FinCEN posted a notice on its website, which indicated that CTA reporting remains voluntary and reporting companies are not subject to liability if they fail to file a BOIR because, even though the Supreme Court ruling stayed the nationwide preliminary injunction issued in Texas Top Cop Shop, Inc., the Smith court’s decision granting a nationwide stay on enforcement of the CTA remains in effect.
It is currently unclear when (or even if) a CTA filing deadline will be reinstated. We will continue to monitor and provide further updates regarding the Texas Top Cop Shop, Inc. appeal as well as whether the Trump administration’s Department of Justice opts to file an expedited appeal of the Smith court’s nationwide preliminary injunction. Meanwhile, reporting companies should remain vigilant, be prepared to file a BOIR on short notice if necessary, and carefully consider whether to voluntarily file a BOIR or wait for the outcome of the pending legal battles.
Please contact a lawyer on our team with any questions you might have concerning reporting and compliance requirements as we continue to monitor these developments. Please note that we do not provide advice as to the application of the CTA to an entity unless we have been expressly engaged to provide such advice.
[1] You can find our prior Client Alerts concerning the CTA’s implementation here, here, and here.
[2] Texas Top Cop Shop, Inc., et al. v. Garland et al., No. 4:24-CV-478, 2024 WL 5049220 (E.D. Tex. Dec. 3, 2024).
[3] Id. at *37.
[4] Smith v. United States Dep’t of the Treasury, No. 6:24-CV-336-JDK, 2025 WL 41924, at *14 (E.D. Tex. Jan. 7, 2025).
[5] Id. at *2.