Legal Bulletins

Corporate Transparency Act Injunctions Update - yet again

On January 23, 2025, the Supreme Court of the United States granted the government’s application for a stay of the injunction against enforcement of the Corporate Transparency Act (CTA) pending disposition of the appeal in the United States Court of Appeals for the Fifth Circuit. However, in light of a separate U.S. District Court injunction issued on January 7, 2025, the Financial Crimes Enforcement Network (FinCEN) has determined that Beneficial Ownership Information Reports (BOIRs) for reporting companies are not currently required to be filed.

History

• January 1, 2024:  CTA becomes effective; “reporting companies” are required to file BOIRs within applicable deadlines.

• December 3, 2024:  U.S. District Court in Texas issues nationwide injunction (as amended on December 5, 2024). Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, 2024 WL 5049220 (E.D. Tex. Dec. 5, 2024).

• Following District Court’s injunction, FinCEN announces that reporting companies are not currently required to file a BOIR.

• December 23, 2024:  U.S. Court of Appeals for the Fifth Circuit grants the government’s emergency motion to stay injunction. Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5203138 (5th Cir. Dec. 23, 2024).

• FinCEN announces that reporting companies are once again required to file a BOIR but extends filing deadlines.

• December 26, 2024:  Fifth Circuit Court of Appeals reverses prior decision and allows injunction against enforcement of the CTA to stand.

• January 7, 2025:  A different U.S. District Court in Texas issues a separate nationwide injunction against enforcement of the CTA. Smith v. U.S. Department of the Treasury, No. 6:24-CV-336-JDK, 2024 WL 4172431 (E.D. Tex. Sept. 12, 2024).

• January 23, 2025:  U.S. Supreme Court grants the government’s application to stay the injunction against enforcement of the CTA. McHenry v. Texas Top Cop Shop, 2025 WL 272062, U.S. (Jan 23, 2025).

Current Status: Following the Supreme Court’s stay of the injunction, FinCEN announced on its BOI webpage that, as a separate nationwide injunction still remains in place, reporting companies will not be required to file and will not be subject to liability for not filing a BOIR. Reporting companies may, however, file a BOIR on a voluntary basis.

Based on these events, we reiterate our earlier recommendation that reporting companies that have not yet filed a BOIR with FinCEN continue to collect the necessary information from their beneficial owners so that, in the event the injunction is lifted, a BOIR can be filed quickly. The appeal to the Fifth Circuit has been expedited, with oral arguments expected to be heard on March 25, 2025.

We will continue to monitor this closely and provide updates as they become available. For more information concerning the CTA and its reporting requirements, please contact James McKittrick or Michele Walsh.

James J. McKittrick, Jr.
410-576-4134 • jmckittrick@gfrlaw.com

Michele Bresnick Walsh
410-576-4216 • mwalsh@gfrlaw.com