On January 23, 2025, the U.S. Supreme Court stayed a nationwide preliminary injunction issued in Texas Top Cop Shop, Inc. et al. v. Garland et al., creating further legal uncertainty surrounding the Corporate Transparency Act (CTA). Despite this ruling, the Financial Crimes Enforcement Network (FinCEN) has clarified that reporting under the CTA remains voluntary for now.
FinCEN confirmed that the CTA’s requirements cannot be enforced because a second nationwide injunction, issued earlier this month in Smith et al. v. United States Department of the Treasury et al. by the same Texas court, is still in effect. This injunction continues to block the government from enforcing CTA reporting obligations, providing a temporary reprieve for reporting companies.
Although the Supreme Court’s order in the Texas Top Cop Shop litigation does not address the nationwide injunction in the Smith v. Treasury litigation, reporting companies may see that specific nationwide injunction stayed or lifted soon. Moreover, reporting companies should not expect to see any decision made on the merits in the Texas Top Shop litigation as oral arguments are not scheduled until March 25, 2025, and it is unclear whether Congress or the executive branch will take any steps this year that could impact the CTA.
What Clients Should Do:
While reporting companies may continue to delay filing for now, it is critical to stay vigilant and monitor developments closely. Companies should be prepared to submit any required reports promptly should the injunctions be lifted or stayed. To avoid compliance challenges, ensure all necessary information is organized and ready for filing by applicable deadlines.
