Corporate Transparency Act Enforcement Remains in Limbo

On December 3, 2024, in Texas Top Cop Shop v. Garland et al. (case 4:24-cv-00478) (now known as Texas Top Cop Shop v. McHenry), a federal court in the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (“CTA”), including its January 1, 2025 filing deadline for reporting companies formed prior to January 1, 2024.

The federal government filed an appeal, and the Fifth Circuit initially stayed the injunction on December 23, 2024 (i.e., lifted the injunction and reinstated CTA enforcement) while the government’s Financial Crimes Enforcement Network (“FINCEN”) agreed to move the reporting deadline to January 13, 2025; however, a different Fifth Circuit panel reversed course and vacated the stay (i.e., reinstated the injunction).

The Supreme Court of the United States stayed the Fifth Circuit injunction related to Texas Top Cop Shop on January 23, 2025. Despite the Supreme Court’s action, CTA enforcement remains subject to a separate nationwide injunction issued in a different federal case (Smith v. U.S. Department of the Treasury). As such, currently, FINCEN has stated CTA filings remain voluntary while the injunction is in force and while these cases are litigated.

The status of the CTA and these cases remain ongoing. Given this fluid situation, reporting companies under the CTA are encouraged to seek legal counsel.