Highlights
- The U.S. Supreme Court granted a stay of an injunction suspending enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting rule
- A separate nationwide injunction issued by a different federal judge continues to enjoin enforcement of the CTA
- Obligations under the CTA to file BOI reports currently cannot be enforced by FinCEN
Continuing a series of rapid-fire legal developments regarding the Corporate Transparency Act (CTA), on Jan. 23, 2025, the U.S. Supreme Court granted a stay of the amended injunction issued Dec. 5, 2024, by the U.S. District Court for the Eastern District of Texas. However, a separate nationwide injunction – issued by a different federal judge in Texas on Jan. 7, 2025 – continues to enjoin the Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA’s beneficial ownership information (BOI) reporting deadlines.
As a result, reporting obligations under the CTA currently cannot be enforced by FinCEN. It is anticipated that FinCEN will appeal the Jan. 7 injunction.
To recap recent developments:
- Dec. 3, 2024 – The U.S. District Court for the Eastern District of Texas issued a nationwide injunction enjoining enforcement of the CTA, suspending all reporting obligations under the act (Texas Top Cop Shop, Inc. v. McHenry – formerly, Texas Top Cop Shop v. Garland). This order was amended Dec. 5, 2024.
- Dec. 23, 2024 – The motions panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court injunction. The stay by the Court of Appeals restored initial reporting deadlines for reporting companies. FinCEN responded by issuing an alert extending initial reporting deadlines.
- Dec. 26, 2024 – The merits panel of the Fifth Circuit vacated the stay issued by its motions panel, restoring the district court’s injunction and suspending reporting obligations under the CTA pending resolution of the appeal.
- Dec. 31, 2024 – The Department of Justice filed an application for stay with the U.S. Supreme Court requesting that the Dec. 5 injunction be stayed or narrowed while the case proceeds through the Fifth Circuit.
- Jan. 7, 2025 – The U.S. District Court for the Northern District of Texas issued a second nationwide injunction enjoining enforcement of the CTA, suspending all reporting obligations under the CTA (Smith v. U.S. Department of the Treasury).
- Jan. 23, 2025 – The U.S. Supreme Court granted a stay of the Dec. 3rd injunction pending the disposition of the Texas Top Cop Shop appeal before the Fifth Circuit and the disposition of a petition for a writ of certiorari and related final judgment.
FinCEN, in an alert published Jan. 24, 2025, referenced the Jan. 7 injunction, stating that, “reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop.” FinCEN further noted that for so long as the nationwide injunction issued in Smith remains in force, companies will not be subject to liability for failure to file their BOI reports. Reporting companies may continue to voluntarily submit BOI reports.