Who Needs 6 Flags for a bumpy ride?! - The CTA Is Back in Force! Wait, No It Isn't!
Posted: January 23, 2025
The Corporate Transparency Act (CTA) has been on and off over the last couple months, keeping things interesting for US businesses. Most recently, the United States Supreme Court issued a stay of the preliminary injunction put in place by the Eastern District of Texas on December 5. The Supreme Court stated as follows:
In Justice Gorsuch's concurrence, he thought the court should go even further. He said:
JUSTICE GORSUCH, concurring in the grant of stay. I agree with the Court that the government is entitled to a stay of the district court’s universal injunction. I would, however, go a step further and, as the government suggests, take this case now to resolve definitively the question whether a district court may issue universal injunctive relief.
Is the CTA back in full force?
In response to the decision via a news alert on the FinCEN website, FinCEN stated as follows on January 24, 2025:
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.
Reviewing the January 7, 2024 Injunctive Order in the Smith case, the court specifically stated that FinCEN was enjoined from enforcing the CTA against the plaintiffs in that case, but goes on to state in a seemingly general statement with wider application that "the Court STAYS the effective date of the Reporting Rule (31 C.F.R. § 1010.380) while this lawsuit is pending."
On February 6, FinCEN updated its website to state that it had appealed the district court injunction in the Smith case on February 5th and that if the injunction is stayed, people will have 30 days to file their BOI reports.
| Jan 23 2025 | Application (24A653) for stay presented to Justice Alito and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24–cv–478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought. Should certiorari be denied, this stay shall terminate automatically. In the event certiorari is granted, the stay shall terminate upon the sending down of the judgment of this Court. Justice Gorsuch concurring in the grant of stay. (Detached Opinion). Justice Jackson dissenting in the grant of stay. (Detached Opinion) |
In Justice Gorsuch's concurrence, he thought the court should go even further. He said:
JUSTICE GORSUCH, concurring in the grant of stay. I agree with the Court that the government is entitled to a stay of the district court’s universal injunction. I would, however, go a step further and, as the government suggests, take this case now to resolve definitively the question whether a district court may issue universal injunctive relief.
Is the CTA back in full force?
In response to the decision via a news alert on the FinCEN website, FinCEN stated as follows on January 24, 2025:
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.
Reviewing the January 7, 2024 Injunctive Order in the Smith case, the court specifically stated that FinCEN was enjoined from enforcing the CTA against the plaintiffs in that case, but goes on to state in a seemingly general statement with wider application that "the Court STAYS the effective date of the Reporting Rule (31 C.F.R. § 1010.380) while this lawsuit is pending."
On February 6, FinCEN updated its website to state that it had appealed the district court injunction in the Smith case on February 5th and that if the injunction is stayed, people will have 30 days to file their BOI reports.
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