On January 23, 2025, the United States Supreme Court stayed the injunction granting the enforcement of the Corporate Transparency Act (CTA) under the Texas Top Cop Shop, Inc. v. Garland case; however, 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 the Smith v. U.S. Department of the Treasury case.
Due to the injunction issued by the Smith court, on January 24, 2025, the Financial Crimes Enforcement Network (FinCEN) confirmed on its website that despite the United States Supreme Court’s ruling, reporting companies are still not subject to liability if they do not file a beneficial ownership information report. FinCEN’s specific January 24, 2025 statement provides:
“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.”
The future of the CTA is unknown. Currently, the U.S. Court of Appeals for the Fifth Circuit is scheduled to hear oral arguments on the constitutionality of the CTA in the Texas Top Cop Shop case on March 25, 2025, and there are several other cases pending in a number of courts which are challenging the legitimacy of the CTA.
In addition, various bills have been introduced in Congress to repeal the CTA, a topic that has also drawn interest from Mergers and Acquisitions Lawyers assessing the impact on corporate transactions, and it is still unknown whether the new Trump administration will even support the CTA.
Even though filing obligations are currently on hold, it is still our recommendation to continue collecting beneficial ownership information, so you are prepared to file if the reporting requirements are reinstated.
The Mergers and Acquisitions Lawyers at FBFK will continue to follow the developments relating to the reporting requirements and keep you updated.
