Tag: nationwide injunction

Corporate Transparency Act Recent Update

As previously reported, in early December, the District Court for the Northern District of Texas issued a nationwide injunction against the enforcement of the CTA [1]. The government quickly appealed. Just a few weeks later, on December 23, 2024, the Fifth Circuit Court of Appeals granted the government’s emergency motion to stay the nationwide injunction — effectively lifting the injunction and allowing the enforcement of the CTA to proceed. Given there was a January 1, 2025, deadline for millions of small business owners to file, FinCEN graciously decided to extend the filing deadline to January 13, 2025.

Then, just three days later, on December 26, 2024, in a short, one-page order, a different panel of judges from the same Fifth Circuit Court of Appeals reinstated the injunction, again placing the CTA and its enforcement provisions on hold. The government again quickly responded, petitioning the U.S. Supreme Court to lift the injunction. On January 23, 2025, the Supreme Court did precisely that — granting the government’s motion. The Supreme Court’s order, however, only applied to the injunction issued by the federal judge in Texas. Since a separate nationwide order issued by a different federal judge in Texas [2] was still in place, FinCEN posted a new update to its website one day later, stating:

“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. [3] “

Opinions vary regarding whether reporting companies should file voluntarily. At the very least, reporting companies should be prepared to file quickly if and when the “red light” turns green once again. In the meantime, we continue to watch for any additional rulings. To stay up to date, please check our website regularly or contact a member of our Corporate Transparency Team for advice.

[1] Texas Top Cop Shop, Inc. v. McHenry

[2] Smith v. U.S. Department of the Treasury

[3] https://www.fincen.gov/boi (last accessed February 3, 2025)

© 2025 Chuhak & Tecson P.C.
For more on the Corporate Transparency Act, visit the NLR Corporate Business Organizations section

Corporate Transparency Act— Nationwide Injunction Update and Key Considerations

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction halting enforcement of the Corporate Transparency Act (“CTA”).1 In response, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) confirmed it will comply with the injunction while also appealing the decision. FinCEN also states on its website that reporting companies are not required to file beneficial ownership information during the injunction and will not incur penalties for failing to do so.

For so long as the injunction remains in place, it is safe not to make CTA filings. On the other hand, it is impossible to know whether and when the injunction may be lifted. And if it is lifted, there may be limited time for filings to be made before penalties accrue. Filers who choose not to file now may wish to assemble their information so they are ready to file on short notice should the need arise. We also recommend that filers who do not have particular privacy or other concerns consider filing notwithstanding the injunction to ensure that they are compliant no matter the outcome of the lawsuit.2 Ultimately, the decision to file is a personal and business decision that will vary by client.

Below are key points to consider:

  1. If you have already applied for a FinCEN Identifier, your sensitive information is already submitted, so there is less risk in proceeding with the filing.
  2. If privacy and business concerns are minimal, consider filing now to avoid a potential rush if the injunction is lifted and filings become due immediately.
  3. For entities formed in 2024 with a non-12/31 filing deadline, consider filing if privacy is less of a concern. Although FinCEN may provide an extension in these situations, penalties remain steep and the outcome is uncertain.

1See Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al.

2We previously published some advisories on the general application of the CTA and its specific application for those with entities for estate planning purposes and the rules and guidelines are largely unchanged.

Copyright 2024 Goulston & Storrs PC.
For more on the CTA, visit the NLR Corporate Business Organizations section