This ruling stayed the effective date of the CTA's reporting rule.
On the afternoon of January 23, 2025, the U.S. Supreme Court issued an order lifting the nationwide preliminary injunction issued by a U.S. District Court in Texas that had blocked enforcement of the Corporate Transparency Act (CTA). It had been appealed to the U.S. Supreme Court earlier this month.
However, while the SCOTUS motion was pending in the Texas Top Cop Shop case, a judge in the Eastern District of Texas issued a ruling in early January on a separate CTA case (Smith et al v. Treasury). This ruling stayed the effective date of the CTA's reporting rule.
In response to these developments, the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) issued a statement earlier today indicating that reporting companies are not required to file beneficial ownership reports while the order in the Smith case remains in effect.
The full text of FinCEN’s statement is as follows:
In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
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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.
We will continue to monitor these developments and issue additional Alerts as needed.
About Duane Morris
Duane Morris is actively monitoring developments regarding the CTA and issuing Alerts on the topic. Duane Morris will provide advice to clients related to CTA compliance only when explicitly engaged to do so in writing.
For More Information
If you have any questions about this Alert, please contact Thomas R. Schmuhl, Jocelyn Margolin Borowsky, Joel N. Ephross, Bruce H. Jurist, Hope P. Krebs, Lee J. Potter Jr., any of the attorneys in our Corporate Transparency Act Group, the attorney in the firm with whom you are regularly in contact, or Michael A. Gillen or any of the professionals in the Tax Accounting Group.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.