The Corporate Transparency Act – Lingering Uncertainty Despite Supreme Court’s Decision – January 24, 2025
Almost a month after the initial deadline, the United States Supreme Court has weighed in on whether or not reporting companies are required to comply with the Corporate Transparency Act. Unfortunately, despite the Supreme Court’s decision to stay the injunction initially granted by a federal district court in Texas, the matter is far from settled. Due to a nationwide injunction issued in a separate Texas federal district court case, reporting companies are still not required to file Beneficial Ownership Information Reports, although they remain free to voluntarily file.
In an effort to untangle the various cases and decisions, the following is a brief summary of how enforcement of the Corporate Transparency Act reached this point.
- January 1, 2024 – Corporate Transparency Act (the “CTA”) goes into effect. All non-exempt entities (“Reporting Companies”) formed after this date, but before January 1, 2025, are required to file Beneficial Ownership Information (“BOI”) Reports with the Financial Crimes Enforcement Network (“FinCEN”) within 90 days of the date of formation. All Reporting Companies existing prior to this date are required to file BOI Reports by January 1, 2025, and those created after January 1, 2025 must file within 30 days.
- December 3, 2024 – U.S. District Court Judge Amos Mazzant, sitting in the Eastern District of Texas, issues a nationwide injunction against enforcement of the CTA in Texas Top Cop Shop, Inc., et al. v. Garland, et al. FinCEN advises that Reporting Companies are not required to file BOI Reports but may continue to do so voluntarily.
- December 23, 2024 – A three judge panel for the Fifth Circuit stayed Judge Mazzant’s injunction, reinstating the requirement for Reporting Companies to file BOI Reports in accordance with the CTA. FinCEN extends the deadline from January 1, 2025 to January 13, 2025.
- December 26, 2024 – A panel of Fifth Circuit judges who are slated to hear the appeal overturned the stay issued by the 3-judge panel and reinstate the injunction. FinCEN again advises that Reporting Companies are not required to file BOI Reports but may continue to do so voluntarily.
- December 31, 2024 – The government filed an application with the US Supreme Court to stay the injunction issued by the federal district court for the Eastern District of Texas.
- January 7, 2025 – U.S. District Court Judge Jeremy Kernodle, siting in the Eastern District of Texas, issues a nationwide injunction against enforcement of the CTA in Smith v. U.S. Department of the Treasury.
- January 23, 2025 – The US Supreme Court overturns the Fifth Circuit and grants the government’s request to stay the injunction issued in Top Cop Shop, Inc., et al. v. Garland, et al.
- January 24, 2025 – FinCEN acknowledges the Supreme Court’s decision, but advises that as a result of the injunction issued by Judge Kernodle, Reporting Companies are not required to file BOI Reports but may continue to do so voluntarily.
As of today, the government has not appealed the injunction issued by Judge Kernodle, but the time to appeal has not yet expired. We will continue to monitor the courts and FinCEN guidance and provide updates.