Corporate Transparency Act | Supreme Court Allows Enforcement
If you’re one of the millions of businesses in the US, you’ve been on a rollercoaster called the Corporate Transparency Act (CTA).
At this point, according to the Financial Crimes Enforcement Network (FinCEN)’s website, “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.
The CTA situation is continually evolving and our firm will continue to provide updates as they become available. If you require assistance with the process of compliance with the CTA, please contact us.
CTA Saga, Episode Guide
If you need a crash course of the unfolding Corporate Transparency Act situation, read the highlights below:
Episode 1: As you may have read in our previous emails, the CTA was signed into law on January 1, 2024, to enhance corporate transparency and prevent illicit activities such as money laundering and terrorism financing. This legislation mandates certain entities, including LLCs and closely held corporations, to disclose beneficial ownership information to FinCEN.
Episode 2: In early December, a federal district court in Texas issued a preliminary injunction, which blocked the Department of Treasury from enforcing the reporting requirements under the Corporate Transparency Act. Reporting entities need not comply with the January 1, 2025, reporting deadline.
Episode 3: In late December, the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) made the CTA immediately enforceable, reversing the lower court's nationwide preliminary injunction. The deadline was revived.
Episode 4: The deadline for compliance was extended to January 13, 2025.
Episode 5: The Fifth Circuit reversed course. They barred the United States Department of the Treasury’s FinCEN from enforcing the CTA’s disclosure requirements against reporting companies. Any entity, including those formed before January 1, 2024, was no longer required to report by January 1, 2025, (the original compliance deadline) or January 13, 2025 (the extension deadline).
Episode 6: As of late January 2025, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop.
At Buckman Macdonald & Brown PC, we are committed to keeping our clients informed about crucial legal developments that may impact business operations, and we appreciate the continued trust that you have placed in us for your legal needs.