What happened?

On January 23, 2025, the U.S. Supreme Court lifted a nationwide preliminary injunction on enforcing the Corporate Transparency Act (CTA) in the case of Texas Top Cop Shop, Inc. et al. v. Garland et al. Despite this ruling, the Financial Crimes Enforcement Network (FinCEN) has clarified that reporting under the CTA remains voluntary.

Overview:

• FinCEN issued guidance on January 24, 2025, stating that reporting companies are not required to file beneficial ownership information reports.
  • While the injunction from Smith v. Treasury is in effect, companies can voluntarily submit these reports but are not subject to liability if they choose not to.
  • Parties should remain prepared to file when and if the CTA filing obligations are fully reinstated.

• Small Businesses: Small businesses are still not required to register with FinCEN. The registration is part of the CTA, an anti-money laundering statute passed in 2021 to reduce shell corporations and money laundering.

Additional Details

• Supreme Court Ruling: The Supreme Court stayed a nationwide injunction from Texas Top Cop Shop, Inc. v. McHenry. However, a separate injunction from Smith v. U.S. Department of the Treasury remains, so reporting companies are not required to file beneficial ownership information with FinCEN.

• Temporary Reprieve: FinCEN confirmed that the CTA’s requirements cannot be enforced due to the injunction in Smith v. Treasury. This provides a reprieve for reporting companies.

• Potential Changes: The Reporting Rule could become enforceable again while the Fifth Circuit and other courts evaluate its constitutionality. FinCEN advises companies to stay prepared for potential changes in filing obligations.

• Upcoming Decisions: Although the Supreme Court’s order in the Texas Top Cop Shop litigation does not address the injunction in Smith v. Treasury, reporting companies may see that specific injunction stayed or lifted soon. Oral arguments in the Texas Top Cop Shop litigation are scheduled for March 25, 2025.

Source References

• FinCEN BOI
• Federal: Texas Court Suspends (for Now) the Enforcement of the Corporate Transparency Act (CTA) (VensureHR)

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