Corporate Transparency Act Resource Center
The Corporate Transparency Act (CTA) is a federal law that requires certain business entities (reporting companies) to submit beneficial ownership information reports (BOIRs) to the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN). The BOIRs require reporting companies to disclose information about the entity and the identities and other personal information about their company applicants that actually form the entity and their beneficial owners that own 25% or more of the entity or have substantial control over the entity (regardless of whether they have any actual ownership). Since the CTA took effect on January 1, 2024, there have been many legal challenges to it, and they have reached different conclusions, making it dizzying to try to keep up. Attorneys in Shipman's Business and Corporate practice have created this resource page to track the CTA’s requirements and its enforcement twists and turns. Developments appear in reverse chronological order, with the latest developments at the top.
Corporate Transparency Act: The Beat Goes On
Date: February 6, 2025
The government has appealed the Smith case (Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.)) that is currently serving as the basis for a nationwide injunction on the enforcement of the Corporate Transparency Act (CTA), notwithstanding that the U.S. Supreme Court eliminated the nationwide injunction of the CTA in another case (Texas Top Cop Shop). The government also filed a motion to stay (eliminate) the Smith injunction. The Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN) has posted the following update on its website, which indicates at least a 30-day filing extension if the CTA comes back to life. It is unclear what the government has in mind for further considerations related to reducing the regulatory burdens on businesses, especially small businesses. In the meanwhile, there have been several bills introduced in Congress to repeal the CTA. Where the music stops or if there will be a new song sheet remains to be seen. We will continue to monitor the situation. Below is FinCen's Alert.
Alert: Ongoing Litigation – Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.) & Voluntary Submissions
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 7, 2025, in the case of Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), the U.S. District Court for the Eastern District of Texas, Tyler Division, issued an order enjoining the government from enforcing the CTA against the plaintiffs and staying FinCEN’s regulations implementing the CTA’s reporting requirements (31 C.F.R. § 1010.380). On February 5, 2025, the Department of Justice—on behalf of the Department of the Treasury (Treasury)—filed a notice of appeal of the district court’s order and, in parallel, has sought to stay that order as the appeal proceeds.
If the district court’s order is stayed, thereby allowing FinCEN’s Reporting Rule to come back into effect, FinCEN intends to extend the reporting deadline for all reporting companies 30 days from the date the stay is granted. Further, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, FinCEN, during that 30-day period, will assess its options to modify further deadlines or reporting requirements for lower-risk entities, including many U.S. small businesses, while prioritizing reporting for those entities that pose the most significant national security risks.
In the meantime, FinCEN is complying with—and will continue to comply with—the district court’s order for as long as it remains in effect. As a result, FinCEN is not currently enforcing the CTA against the plaintiffs in that action—Samantha Smith and Robert Means—and their related entities, and FinCEN is also not currently enforcing the requirements of 31 C.F.R. § 1010.380 against any individual or entity. Reporting companies are, therefore, not currently required to file beneficial ownership information with FinCEN. Reporting companies may continue to voluntarily submit beneficial ownership information reports, free of charge, using FinCEN’s E-Filing system. More information is available at fincen.gov/boi.
BREAKING NEWS: Corporate Transparency Act – CHAOS REIGNS SUPREME! U.S. Supreme Court Eliminates Nationwide Injunction in One Case, but District Court Prohibits Enforcement Nationwide in Another Case
Date: January 24, 2025
On January 23, 2025, the U.S. Supreme Court granted the government’s request to stay (eliminate) the lower court’s nationwide injunction related to the enforcement of the Corporate Transparency Act (CTA) in Texas Top Cop Shop, Inc., et al. v. James R. McHenry, III, Acting Attorney General, et al. In a mere paragraph, the Court’s decision would have seemed to allow the Financial Crimes Enforcement Network of the Department of the Treasury (FinCEN) to enforce the CTA and impact tens of millions of companies that would be required to file their initial beneficial ownership reports and amendments to any previously filed reports.
BUT NOT SO FAST!
In the meanwhile, on January 7, 2025, a different Texas District Court stayed, on a nationwide basis, the effective date of the Reporting Rule (the regulation), which implements the CTA. The reporting company filing requirements under the CTA are dependent on having implementing regulations in place. Therefore, without the Reporting Rule in place, there are currently no CTA filing requirements. That case is Samantha Smith and Robert Means v. United States Department of the Treasury, et al. (United States District Court Eastern District of Texas/Tyler Division Case No. 6:24-cv-00336).
FinCEN confirmed that position in an update to its website, noted below.
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.
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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.
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What does this mean for reporting companies? They are currently still not required to file their beneficial ownership information reports or any amendments to previously filed reports. However, the state of play could change if the government appeals the Smith decision. It does not take a great leap of faith that, if it the case moves up the appeals process, it may suffer the same fate as the Texas Top Cop Shop case. Remember that the Texas Top Cop Shop case is still on appeal to the Fifth Circuit Court of Appeals with respect to the merits of the case as to whether the CTA is constitutional, with oral argument scheduled for March 25, 2025.
There have also been a number of bills proposed in Congress to repeal the CTA. It is unclear if any of them will proceed through the legislative process.
We will continue to monitor the situation.
Corporate Transparency Act - The Gift That Keeps on Giving - Government Appeals to the U.S. Supreme Court to Eliminate Nationwide Injunction
Date: January 3, 2025
Not content to have an expedited hearing in March on the merits of the case at the Fifth Circuit Court of Appeals regarding the constitutionality of the Corporate Transparency Act (CTA), the Government filed an application with the U.S. Supreme Court on New Year’s Eve to stay (eliminate) the nationwide injunction or to at least narrow it to the plaintiffs in the case (Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al.). The preliminary nationwide injunction currently in effect means that the Financial Crimes Enforcement Network of the Department of Treasury (FinCEN) cannot enforce the CTA, and reporting companies are not required to file (or update) their beneficial ownership information reports (BOIRs).
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It's Déjà Vu All Over Again - Corporate Transparency Act Nationwide Injunction is Reinstated
Date: December 27, 2024
Okay, let’s follow the bouncing the ball. On December 3, 2024, the U.S. District Court for the Eastern District of Texas/Sherman Division entered an order enjoining the enforcement of the Corporate Transparency Act (CTA) and its corresponding Reporting Rule. The Government requested a stay of the preliminary injunction, which the District Court denied. The Government appealed, and on December 23, 2024, a motions panel of the Fifth Circuit Court of Appeals granted the Government’s emergency motion for a stay pending appeal, which lifted the injunction and reinstated the CTA and the Reporting Rule. The Financial Crimes Enforcement Network of the Department of Treasury (FinCEN) then extended some of the filing deadlines as we reported in our prior alert.
The motions panel also ordered an expedited appeal on the merits of the case. The merits panel now has the appeal, which remains expedited, and a briefing schedule will be forthcoming. However, to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, the merits panel of the Fifth Circuit has vacated the part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule. That means the nationwide preliminary injunction is back in place.
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Corporate Transparency Act: Nationwide Injunction Lifted and Deadlines Reinstated With Some Extensions
Date: December 24, 2024
As a follow-up to our alert on December 23, 2024 that the nationwide injunction related to the enforcement of the Corporate Transparency Act has been lifted and filings of beneficial ownership information reports by reporting companies should resume, the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) has just posted the following alert with various filing deadline extensions.
In light of a December 23, 2024, federal Court of Appeals decision, reporting companies, except as indicated below, are once again required to file beneficial ownership information with FinCEN. However, because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect, we have extended the reporting deadline as follows:
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Corporate Transparency Act: Nationwide Injunction Lifted and Filing Deadlines Reinstated
Date: December 23, 2024
As we previously reported, on December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al., Judge Amos Mazzant of the United States District Court (Eastern District of Texas/Sherman Division) issued a preliminary nationwide injunction barring the enforcement of the Corporate Transparency Act (CTA).
Today, the Fifth Circuit Court of Appeals stayed the injunction, meaning that the injunction is no longer in effect, and the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) may again enforce the CTA.
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Nationwide Injunction Temporarily Bars Enforcement of the Corporate Transparency Act
Date: December 4, 2024
On December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al., Judge Amos Mazzant of the United States District Court (Eastern District of Texas/Sherman Division) issued a preliminary nationwide injunction barring the enforcement of the Corporate Transparency Act (CTA) finding the following:
Having determined that Plaintiffs have carried their burden, the Court GRANTS Plaintiff’s Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA [Administrative Procedure Act]. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI [beneficial ownership information] reporting deadline pending further order of the Court.
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Corporate Transparency Act (CTA) Compliance - Frequently Asked Questions
Date: January 1, 2024
Attorneys in Shipman's Business and Corporate practice have prepared this FAQ document on the Corporate Transparency Act (CTA), which takes effect on January 1, 2024.
