Corporate Transparency Act updates

Recent Corporate Transparency Act updates have brought significant changes to the enforcement of beneficial ownership reporting requirements. Two major court rulings have created uncertainty for reporting companies, as deadlines for submitting beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN) remain suspended. Below, we break down the latest developments and their implications for businesses.

Supreme Court Stays Injunction in Texas Top Cop Shop Case

On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay the nationwide injunction issued by a federal district court in Texas Top Cop Shop, Inc. v. McHenry (previously Texas Top Cop Shop v. Garland). In this case, the district court had halted enforcement of the CTA’s beneficial ownership reporting rule, including its associated deadlines. The Supreme Court’s decision to stay the injunction means that, for now, the CTA could theoretically be enforced while the case is on appeal. However, this ruling only applies to the Texas Top Cop Shop case and does not resolve the broader legal challenges to the CTA.

Nationwide Injunction in Smith v. U.S. Department of the Treasury

Meanwhile, on January 7, 2025, a separate federal judge in Texas issued another nationwide injunction in Smith v. U.S. Department of the Treasury, blocking enforcement of the CTA. Similar to the Texas Top Cop Shop case, the court in Smith stayed the effective date of the beneficial ownership reporting rule while the case is pending. This injunction remains in effect, meaning reporting companies are not currently required to file beneficial ownership information with FinCEN.

The Supreme Court’s January 23 decision to stay the Texas Top Cop Shop injunction does not affect the Smith injunction. As a result, reporting companies are not obligated to comply with the CTA’s reporting requirements while the Smith order is in place. Companies also cannot be held liable for failing to file beneficial ownership information during this time.

Voluntary Reporting and Future Implications

While the Smith injunction is in effect, reporting companies may still voluntarily submit beneficial ownership information to FinCEN. However, given the Supreme Court’s decision to lift the injunction in the Texas Top Cop Shop case, there is a strong possibility the Court could take similar action in the Smith case if the government requests it. A key question remains whether the Trump administration will appeal the Smith case, which could further shape the enforcement timeline of the CTA. Should the government pursue an appeal and succeed, FinCEN would likely reinstate the beneficial ownership reporting requirements.

If the reporting requirements are reinstated, it is unclear whether FinCEN will provide additional time for companies to comply. For now, reporting deadlines remain suspended, and no further action is required unless the courts issue new rulings.

What Reporting Companies Should Do Now

These Corporate Transparency Act updates highlight the importance of staying informed about ongoing legal developments. Reporting companies should monitor updates from FinCEN and consult with legal counsel to ensure readiness in the event the reporting requirements are reinstated. For more detailed information on the CTA and its implications, you can refer to FinCEN’s official guidance on beneficial ownership reporting.

For now, the key takeaway is that no reporting deadlines are in effect, and companies are not required to file beneficial ownership information with FinCEN. However, the situation could change quickly, so staying proactive is essential.

If you have questions about how these Corporate Transparency Act updates may impact your business, our team is here to help. Contact us for guidance on navigating the evolving requirements under the CTA.