On January 23, 2025, the United States Supreme Court issued an order staying the nationwide preliminary injunction against the Corporate Transparency Act (“CTA”) and its Beneficial Ownership Information (“BOI”) reporting requirements issued in the Texas Top Cop Shop, Inc. v. McHenry (formerly Garland). The injunction issued by the Eastern District of Texas in Texas Top Cop had originally been stayed by the motions panel of the U.S. Court of Appeals for the Fifth Circuit to only be later reinstated by the same court three days later, as detailed in our previous client alerts.
In spite of the Supreme Court order lifting the injunction in the Texas Top Cop Shop case, it did not consider a similar, separate nationwide injunction issued on January 7, 2025, by the Eastern District Court of Texas in Smith v. U.S. Department of the Treasury, which remains in effect. In light of this Smith order, Financial Crimes Enforcement Network (FinCEN) has clarified that reporting companies are not subject to liability or penalties if they fail to file BOI reports while the Smith injunction remains in force. While reporting companies are still not required to file a BOI report, they may voluntarily submit the BOI reports.
The government could still appeal the Smith ruling to the Supreme Court, in which case a similar result to the stay order in the Texas Top Cop Shop case should be expected.
In addition to the injunction action in Smith, there are additional measures being undertaken in both Congress and the Trump Administration that seek to repeal the CTA or at least lessen its burdens on reporting companies.
Leech Tishman is closely monitoring these legal proceedings and related cases and actions challenging the constitutionality and enforcement of the CTA and will update clients as new developments occur.
We welcome you to contact Alex Gase at agase@leechtishman.com or Elissa Steiner at esteiner@leechtishman.com with any questions about this litigation or to discuss your report.