On December 31, 2024, the U.S. government filed an application for a stay of the nationwide preliminary injunction against enforcement of the Corporate Transparency Act (CTA) issued by a Texas district court in Texas Top Cop Shop, Inc. v. McHenry. The Supreme Court granted the application on January 23 and put a hold on the nationwide injunction issued in the case.
However, reporting companies are still not required to file Beneficial Ownership Information (BOI) reports with FinCEN as a result of a separate nationwide order issued by a different district court. On January 7, another injunction against enforcement of the CTA was issued in Smith v U.S. Department of the Treasury. The court enjoined FinCEN from enforcing the CTA against the specific plaintiffs and their entities. The court also stayed the effective date of the CTA’s “Reporting Rule.” Today, FinCEN published an alert to confirm it will not require companies to file BOI reports while the Smith order remains in place.
It remains to be seen how the new administration will handle the CTA, as President Donald Trump opposed the bill that included the CTA during his first term. The government could appeal the January 7 order that issued another injunction. FinCEN may publish additional guidance on its website regarding enforceability or new deadlines, but a new Executive Order titled “Regulatory Freeze Pending Review” could discourage FinCEN from posting new deadlines. There’s also legislation being re-introduced by Republican senators to repeal the CTA.
The government has not yet appealed the Smith order. The injunction in Texas Top Cop Shop, Inc. is stayed pending the disposition of the appeal in the Fifth Circuit; oral arguments are scheduled for March 25. Dinsmore will continue to follow these developments and provide updates as they become available.
In the meantime, we recommend companies evaluate their CTA compliance requirements, gather the necessary information and be prepared to file their BOI reports quickly should the need arise. Dinsmore’s previous coverage on determining whether your entity must file, and what information is required in the filing, can be found here. Additionally, a template of the BOI Report can be downloadedhere, and entities may file directly through FinCEN’s website.
