CTA Ping-Pong

The ping-pong action continues in the federal courts regarding the Corporate Transparency Act (the “CTA”). On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay the nationwide injunction issued by a federal judge in Texas in the case of Texas Top Cop Shop, Inc. v. McHenry (formerly, Texas Top Cop Shop v. Garland). The Supreme Court stayed the lower court’s injunction while the case is on appeal, which would have meant the CTA could be enforced while the case is on appeal if the only injunction in place had been from the Texas Top Cop Shop case. However, in the meantime, on January 7, 2025, a different federal district court judge in Texas entered a separate nationwide injunction against enforcement of the CTA in the case of Smith v. U.S. Department of the Treasury. As in Texas Top Cop Shop, Inc. v. McHenry, the court stayed the effective date of the CTA while the case is pending.

As the U.S. Supreme Court decision only applies to the case of Texas Top Cop Shop, Inc. v. McHenry, the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has posted the following update on its website:

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.

FinCEN has further announced that, if the injunction in Smith v. U.S. Department of the Treasury is stayed on appeal, FinCEN intends to extend the reporting deadline for all reporting companies 30 days from the date the stay is granted. In the meantime, we continue to advise clients to consider undertaking the analyses required to determine their reporting requirements under the CTA so that they may be prepared to file their beneficial ownership information if the CTA is reinstated. The attorneys at Poole Shaffery would be happy to assist you with your CTA analyses and filings.