CTA remains enjoined pursuant to separate nationwide injunction, despite recent SCOTUS decision

On January 23, 2025, the Supreme Court granted the government's motion to stay a nationwide injunction on enforcement of the Corporate Transparency Act (CTA) that was issued by the U.S. District Court of the Eastern District of Texas in Texas Top Cop Shop, Inc. v. Garland. However, on January 7, 2025, another judge in the Eastern District of Texas issued a separate nationwide injunction of the CTA and the Beneficial Ownership Information Reporting Rule (BOI Reporting Rule) in Smith v. U.S. Department of the Treasury.

The Financial Crimes Enforcement Network (FinCEN) issued an alert on January 24, 2025, acknowledging the separate nationwide injunction and, most importantly, confirming that reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court's action in Texas Top Cop Shop.

The Department of Justice has not yet appealed the nationwide injunction issued in Smith v. U.S. Department of the Treasury and it remains to be seen whether the District Court in Smith and/or the Fifth Circuit will vacate the injunction. Given the dynamic environment, it is advisable for reporting companies to continue to assess their beneficial ownership reporting obligations (and collect information as necessary) in order to be in a position to file if and when required.

Additionally, it is not clear whether the Trump Administration will continue to support the government's position in the Texas Top Cop Shop and Smith cases and/or revisit the BOI Reporting Rule over the coming months. Bills have also been introduced in the House and the Senate that would repeal the CTA, although it is not known whether there is sufficient support for enactment.[1] We recommend that reporting companies continue to monitor for further developments over the coming months.

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