On January 23, the U.S. Supreme Court lifted a nationwide preliminary injunction on the enforcement of the Corporate Transparency Act (the CTA), a law requiring millions of business entities to report information about their individual beneficial owners (including the individual persons who control them) to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. The preliminary injunction was originally issued by the U.S. District Court for the Eastern District of Texas in the case of Texas Top Cop Shop, Inc. v. Bondi—formerly, Texas Top Cop Shop v. Garland.

Despite the Supreme Court’s decision in Texas Top Cop Shop, the CTA reporting obligations are still on hold due to a separate nationwide injunction that remains in place. The second nationwide injunction was issued by a different judge of the U.S. District Court for the Eastern District of Texas in the case of Smith v. U.S. Department of the Treasury. The federal government has filed an appeal to the U.S. Court of Appeals for the Fifth Circuit seeking to lift the Smith injunction. This appeal represents the first action taken by the federal government in a CTA court proceeding since January 20, 2025, when the new administration took office.

If the injunction in the Smith case is lifted, the reporting obligations under the CTA would resume and all non-exempt reporting companies would be required to file beneficial ownership information reports (“BOIRs”) within a deadline to be determined by FinCEN. Notably, the government’s request for a stay in the Smith case pending appeal stated that FinCEN intends to extend the CTA compliance deadline for 30 days if the stay is granted. The government also implied that FinCEN is considering changes to the CTA’s reporting requirements to alleviate the burden on low-risk entities while prioritizing enforcement to address the most significant risks to U.S. national security. 

Background

See below to view a timeline of notable developments.

What Might Happen Next

The future of the CTA remains in limbo. For now, FinCEN has acknowledged that a nationwide preliminary injunction in the Smith case remains in place, meaning that reporting companies are not currently required to file BOIRs with FinCEN, and further, that reporting companies are not currently subject to liability if they fail to do so. FinCEN has stated that reporting companies may continue to voluntarily submit BOIRs.¹

Neither the Supreme Court nor any lower court has made a determination on the merits of the constitutionality of the CTA; the rulings to date have only concerned whether the CTA may be enforced while litigation over the validity of the CTA continues. 

As stated above, CTA reporting obligations will likely resume if the Smith injunction is lifted (presumably, within 30 days of such decision), and also could resume in the future depending on the final outcomes in the Smith and Texas Top Cop Shop cases. While new developments may arise in the ongoing litigation over the CTA, Congress could also settle the debate by repealing the CTA.

Given the uncertain landscape, reporting companies who have yet to file their initial BOIRs should consider whether to continue reviewing their reporting obligations under the CTA, as such reporting companies may be required to file BOIRs within 30 days if the government’s request for a stay in the Smith case is granted. Likewise, reporting companies that have already filed should consider whether any changes have occurred to information previously reported, and should be ready to file updated or corrected reports relating to such changes or developments that occur during the pendency of the preliminary injunction. Reporting companies may also choose to voluntarily file initial or updated reports at any time despite the preliminary injunction.

Timeline

Below is a timeline of notable developments since the original nationwide preliminary injunction was issued.

• December 3, 2024 – U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA in the Texas Top Cop Shop case.
• December 5, 2024 – The government appealed the ruling in the Texas Top Cop Shop case to U.S. Court of Appeals for the Fifth Circuit.
• December 6, 2024 – FinCEN issued a statement that it will not enforce the reporting requirements while the injunction is in place and that filing BOIRs during such period is voluntary.
• December 13, 2024 – The government filed a motion with the Fifth Circuit seeking an emergency stay of the injunction in the Texas Top Cop Shop case.
• December 23, 2024 – A motions panel of the Fifth Circuit granted the government’s emergency motion, issuing a stay of the injunction in the Texas Top Cop Shop case pending the Fifth Circuit’s review of the merits of the appeal. Shortly thereafter, FinCEN reinstated the CTA reporting obligations and extended the reporting deadline from January 1 to January 13, 2025
• December 26, 2024 – A separate panel of judges on the Fifth Circuit vacated the stay and reinstated the injunction originating in the Texas Top Cop Shop case, effectively suspending enforcement of the CTA reporting requirements under the CTA. In doing so, the merits panel reasoned that the constitutional status quo needs to be preserved while it considers the parties’ substantive arguments. The Fifth Circuit issued an expedited briefing and oral argument schedule under which briefing is to be completed by February 28, 2025, and oral arguments to occur on March 25, 2025.
• December 27, 2024 – FinCEN issued a new statement that it will not enforce the reporting requirements while the reinstated Texas Top Cop Shop injunction is in place and that filing BOIRs during such period is voluntary. 
• December 31, 2024 – The government filed an emergency application with the Supreme Court for a stay of the injunction originating in the Texas Top Cop Shop case.
• January 7, 2025 – U.S. District Court for the Eastern District of Texas issued a separate nationwide preliminary injunction against enforcement of the CTA in the Smith case.
• January 15, 2025 – U.S. Senator Tommy Tuberville and Congressman Warren Davidson re-introduced the Repealing Big Brother Overreach Act in Congress seeking to overturn the CTA.
• January 23, 2025 – Supreme Court lifted the nationwide injunction originating in the Texas Top Cop Shop case; the Supreme Court’s order did not address the separate nationwide injunction originating in the Smith case.
• January 24, 2025 – FinCEN issued a statement that, despite the Supreme Court’s order, reporting companies are still not required to file BOIRs due to the Smith injunction.
• February 5, 2025 – The government filed an appeal case seeking a stay of the injunction originating in the Smith case. 

¹ Further updates from FinCEN can be found at https://fincen.gov/boi. 

Scott D. DeWald, Andrew F. Dixon, Laura A. Lo Bianco, Mark Patton, Mark D. Patton, Matthew C. Sweger, Amanda L. Thatcher, and Karen L. Witt