Corporate Transparency Act Update: Despite Supreme Court Order, a Different Injunction Keeps the CTA at Bay—For the Time Being

3 min

All eyes were focused on how the U.S. Supreme Court (SCOTUS) would respond to the application for stay filed by the federal government on New Year's Eve seeking a stay of the preliminary nationwide injunction issued by a federal district court in Texas in early December 2024 in the Texas Top Cop Shop case.[1] This injunction barred the enforcement of the Corporate Transparency Act (CTA) and its implementing regulations. On January 23, 2025, SCOTUS issued an unsigned order granting the government's application for stay, meaning that the preliminary injunction issued by the Texas Top Cop Shop court is stayed pending a decision by the United States Court of Appeals for the Fifth Circuit concerning the merits of the injunction. Oral arguments in the Fifth Circuit are scheduled for March 25, 2025.

While SCOTUS was considering the application for stay, another federal district court in Texas issued a nationwide injunction against the enforcement of the CTA reporting regulations. See Smith v. U.S. Dept. of the Treasury, 2025 WL 41924 (E.D. Tx., Jan. 7, 2025). Thus the question morphed quickly into how the SCOTUS order in the Texas Top Cop Shop case would affect the injunction issued in the Smith case.

FinCEN provided its answer to this question in less than 24 hours after the SCOTUS order. In an alert posted on FinCEN's website on January 24, 2025, FinCEN acknowledged the SCOTUS order but stated that it would abide by the injunction issued by the Smith court:

On January 23, 2025, the Supreme Court granted the government's motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court's action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

Thus, reporting companies can continue to submit voluntary filings with FinCEN, but there is not currently an affirmative legal obligation to file beneficial ownership information reports (BOIRs) with FinCEN. It is not clear when or whether the new administration will appeal the injunction issued by the Smith court. Despite the continuing back-and-forth, we continue to recommend that reporting companies be prepared to file their BOIRs.

Kevin Shepherd
Michael Schiffer
Alexander Koff
Samuel Disario

* The authors would like to thank Law Clerk Nicholas O'Connor for his assistance in writing this alert.


[1] Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland, C.A. No. 4:24-CV-478, 2024 U.S. Dist. LEXIS 218294 (E.D. Tex. Dec. 3, 2024). The court amended the order to correct a typographical error on December 5, 2024.