The Supreme Court has weighed in on the ongoing battle concerning the Corporate Transparency Act (the CTA).
As we previously wrote, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcing the CTA in Texas Top Cop Shop, Inc. v. Garland (the Texas Top Cop Order). This injunction was briefly paused by a motions panel of the U.S. Court of Appeals for the Fifth Circuit (the Fifth Circuit) on December 23, 2024. However, just three days later, the Fifth Circuit's merits panel vacated the pause, reinstating the injunction against the CTA. In response, the Government filed an emergency petition with the Supreme Court of the United States (SCOTUS) on December 31, 2024.
On January 23, 2025, SCOTUS stayed the nationwide injunction issued in the Texas Top Cop Order. The case will now return to the Fifth Circuit for a review of the constitutional arguments against the CTA, with oral arguments scheduled for March 25, 2025.
Meanwhile, in another case - Smith v. U.S. Department of Treasury – a different judge in the U.S. District Court for the Eastern District of Texas issued a separate nationwide injunction blocking the CTA’s implementing regulations (the Smith Order). While the Supreme Court's ruling allows the CTA to move forward during the Fifth Circuit's review of the Texas Top Cop case, as of the time of writing, the Smith Order remains in effect, and the Government has yet to file an appeal.
As of today, January 24, 2025, FinCEN has updated the alert on its website confirming that the Smith Order “still remains in place [and] 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.”
Nevertheless, the exact impact of potential actions from the new administration remains uncertain. Notably, legislative efforts like the Repealing Big Brother Overreach Act reflect ongoing attempts to repeal the CTA altogether.
We will continue to monitor developments and provide updates as they unfold.
