Since the Supreme Court stayed the District Court's injunction in the Texas Top Cop Shop case, we have continued to monitor developments with the Corporate Transparency Act (the CTA). As we previously wrote, the Supreme Court's actions in the Texas Top Cop Shop case did not have an immediate effect because of another universal injunction issued by the U.S. District Court for the Eastern District of Texas in the Smith case. However, on February 18, 2025, the U.S. District Court for the Eastern District of Texas stayed the effect of the Smith injunction, citing the Supreme Court's order in Texas Top Cop Shop.
For most reporting companies under the CTA, the deadline is now March 21, 2025. As FinCEN indicated in the court filings in the Smith case, the Department of Treasury is still reviewing the CTA as a matter of policy and whether it could modify the final reporting rules implementing the CTA to minimize the burden on lower-risk entities. FinCEN noted that it may modify the deadline further.
These actions are consistent with Treasury Secretary Scott Bessent's remarks during his confirmation process. Responding to Senator Sheldon Whitehouse's questions, he said, “Beneficial ownership information can be a valuable tool to assist law enforcement efforts. We must also ensure that regulatory requirements are consistent with U.S. laws and appropriately tailored to provide such useful information to law enforcement while not creating unnecessary and substantial burdens or disproportionate legal consequences on law-abiding U.S. individuals and small businesses.”
Congress has also acted on CTA policy. In a bipartisan vote on February 10, 2025, the House of Representatives unanimously passed H.R. 736, the Protect Small Businesses from Excessive Paperwork Act of 2025. This bill would extend the reporting deadline for reporting companies formed before January 1, 2024 to January 1, 2026. However, this bill would not affect the filing deadlines for reporting companies formed on or after January 1, 2024. On the House floor, representatives from both parties spoke of the importance of the anti-money laundering and national security benefits that the CTA provides. Representatives from both parties also expressed frustration with FinCEN's outreach and communications efforts regarding the implementation of the CTA, as well as the vagueness of some provisions of the implementing reporting rule.
We continue to monitor the developments in the courts, guidance and other statements from FinCEN regarding the implementation of the CTA, as well as these new developments in Congress.
