Despite a ruling by the U.S. Supreme Court on January 23, 2025, lifting the injunction blocking the enforcement of the Corporate Transparency Act (CTA) in the Texas Top Cop Shop, Inc. v. Garland case,1 reporting obligations under the CTA remain on hold due to a separate nationwide injunction issued on January 7, 2025, by a different federal judge in Texas in Smith v. U.S. Department of the Treasury.2
On January 24, 2025, the Financial Crimes Enforcement Network (FinCEN) confirmed on its website 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. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”3
As a reminder, in Texas Top Cop Shop, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction on December 3, 2024, preventing FinCEN from enforcing the CTA. That injunction was lifted by the motions panel of the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) on December 23, 2024, after which FinCEN extended the deadlines for reporting companies, including a new reporting deadline of January 13, 2025 (instead of January 1, 2025), for reporting companies created or registered prior to January 1, 2024. Only three days later, however, on December 26, 2024, the merits panel of the Fifth Circuit reinstated the injunction, suspending filing obligations once again. See Sidley’s updates on December 5, 2024, December 10, 2024, December 26, 2024, and December 31, 2024 for more information.
The CTA’s story is far from over. Following the Supreme Court’s decision, the Texas Top Cop Shop case will return to the Fifth Circuit to consider the merits of the case, with briefing to be completed by February 28, 2025, and oral arguments following on March 25, 2025. As of the time of this writing, the government has not filed an appeal in the Smith case, but there are three other district court decisions on appeal in the U.S. Courts of Appeals for the Fourth, Ninth, and Eleventh Circuits.4 The recent changes in Congress and the executive branch may also affect litigation surrounding the CTA.
Although filing obligations are currently paused, reporting companies should consider whether to continue reviewing their obligations under the CTA. Such a review would include identifying beneficial owners and gathering information that would be required for any beneficial ownership information report filings. Gathering that information would ensure they are prepared for any eventuality, including additional superseding orders by the courts. Reporting companies should also continue to monitor for additional updates or guidance from FinCEN as a result of the ongoing litigation.
1 Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Texas, Dec. 3, 2024).
2 Smith et al v. United States Department of the Treasury et al., 6:24-cv-00336 (E.D. Texas, Jan. 7, 2024).
3 See FinCEN, Alert: Ongoing Litigation – Texas Top Cop Shop, Inc., et al. v. McHenry, et al., No. 4:24-cv-00478 (E.D. Tex.) & Voluntary Submissions [Updated January 24, 2025].
4 See Community Association Institute v. Yellen, No. 24-2118 (4th Cir.); Firestone v. Yellen, No. 24-6979 (9th Cir.); and National Small Business United v. Yellen, No. 24-10736 (11th Cir.).
