The Corporate Transparency Act (CTA) has been subject to a series of complex and seemingly contradictory legal developments that continue to unfold. While the situation remains fluid, this update aims to provide clarity on the current (at least as of January 24, 2025) state of CTA enforcement and business obligations.
On January 23, 2025, the Supreme Court intervened in the ongoing CTA litigation by granting the federal government’s request to stay a nationwide injunction in Texas Top Cop Shop, Inc. v. McHenry. This Supreme Court action would have cleared the way for the Financial Crimes Enforcement Network (FinCEN) to begin enforcing beneficial ownership reporting requirements. In fact, many media stories and legal analyses of the decision suggested that companies’ CTA compliance obligations were in effect given the Court’s ruling.
However, on January 24, FinCEN issued an announcement clarifying that businesses still have no obligation to file beneficial ownership reports. This is because a separate nationwide injunction, issued in Smith v. U.S. Department of the Treasury, remains in effect. FinCEN explicitly confirmed that:
- Reporting companies are not currently required to file beneficial ownership information
- No penalties or liability will apply for non-filing while the Smith order remains in force
- Companies may voluntarily submit reports if they choose to do so
Looking ahead, the Fifth Circuit is scheduled to hear arguments on constitutional challenges to the CTA on March 25, 2025. In the meantime, while the Smith injunction is in effect, it appears that FinCEN’s position is that it cannot require mandatory beneficial ownership reporting.
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