CTA Reporting Remains On Hold, But Future Uncertain After Supreme Court Ruling in Texas Top Cop Shop Case

By David H. Freedman and Jordan M. Small

On January 23, 2025, the United States Supreme Court issued an order which stayed the injunction preventing the enforcement of the Corporate Transparency Act (CTA) that had been issued in the Texas Top Cop Shop case.

However, the CTA and its corresponding reporting requirements remain on hold, as the ruling from the Supreme Court did not address the injunction against the CTA’s reporting requirements that was issued in a different case, Smith v. United States Department of the Treasury.

While the CTA requirements remain on hold, this ruling casts doubt on the future of the CTA and whether companies will be required to comply with its provisions. Currently, while the nationwide injunction that deferred all reporting requirements issued in the Texas Top Cop Shop case is on hold, the narrower injunction issued in the Smith case, which stays the effective date of the CTA’s reporting rule, remains in place. 

As it has with previous rulings, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued the following response to the ruling and providing an update on the effects of the ongoing litigation:

Alert: Ongoing Litigation – Texas Top Cop Shop, Inc., et al. v. McHenry, et al., No. 4:24-cv-00478 (E.D. Tex.) & Voluntary Submissions [Updated January 24, 2025]

“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.

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.”

This development is another chapter in the ever-evolving situation regarding the CTA. Further adding to the lack of clarity in the CTA’s future is the incoming executive administration, which has already issued several executive orders targeting what it views as unnecessary regulatory burdens. In addition to the legislative and judicial attempts to repeal the CTA and its reporting requirements, there are many avenues by which the CTA may eventually be repealed or invalidated. 

As such, Reporting Companies are not currently required to file Beneficial Ownership Information Reports (BOIR). However, Reporting Companies who are wary of the potential re-imposition of deadlines may continue to file reports voluntarily, and those who choose not to file at this time should remain prepared for future obligations. 

We will continue to follow these developments and provide further updates as they are available on our CTA blog and other social media.