Supreme Court Stays Injunction in One Case, but CTA Compliance Remains Temporarily on Hold Pending Other Appeal

In the latest development surrounding the Corporate Transparency Act (“CTA”), on Jan. 23, 2025, the United States Supreme Court stayed a nationwide injunction previously issued by a Texas federal court in Texas Top Cop Shop, Inc. v. McHenry (Case No. 4:24-cv-478, E.D. Tex., formerly Texas Top Cop Shop v. Garland).

Ordinarily, the Supreme Court’s decision would have reinstated the CTA’s nationwide beneficial ownership information (“BOI”) reporting requirements. However, due to a separate ruling on Jan. 7, 2025, by the U.S. District Court for the Eastern District of Texas in Smith v. U.S. Department of Treasury (Case No. 6:24-cv-336-JDK, E.D. Tex.), reporting obligations remain suspended. The Financial Crimes Enforcement Network (“FinCEN”) has confirmed that reporting companies will not be subject to penalties under the CTA while the Smith decision is appealed. Nonetheless, FinCEN continues to accept voluntary submissions of BOI reports.

The Supreme Court’s handling of the Texas Top Cop Shop injunction suggests that the Smith decision may be overturned on appeal. If the stay is lifted, FinCEN will likely establish a new compliance deadline for reporting companies, as it did in late December, but the length of any extension remains uncertain. Given the ongoing uncertainty regarding the CTA’s legal status, reporting companies should be prepared to meet their BOI reporting obligations on short notice.

This article was originally published as a Foulston Issue Alert here.