On January 23, 2025, the United States Supreme Court granted the government’s emergency application motion, lifting the nationwide injunction of enforcement of the Corporate Transparency Act (CTA) that had been issued in connection with the Texas Cop Shop case in the Eastern District of Texas. Despite the stay granted by the Supreme Court, however, a nationwide injunction issued in Smith v. U.S. Department of the Treasury on January 7, 2025, an unrelated (and up to this point lesser well known/discussed) case also filed in the Eastern District of Texas challenging the constitutionality of the CTA, still remains in effect. In Smith, the court granted the plaintiffs’ (two individuals that formed Texas limited liability companies not engaged in any interstate commerce or owning any interstate or foreign assets) motion for a preliminary injunction based on plaintiffs’ demonstration that the CTA is likely unconstitutional, that there is substantial risk of irreparable harm to the plaintiffs if the injunction is not granted, and that the balance of equities and public interest support preliminary relief.

Consequently, FINCEN has acknowledged on its website that despite the Texas Top Cop Shop ruling, reporting companies are still not required to file any beneficial ownership information reports (BOIR) under the CTA at this time because of the Smith injunction, and there is no liability for failure to file BOIRs while the injunction in Smith remains in force, though reporting companies may continue to voluntarily file BOIRs.

We continue to monitor developments in this area and it would be prudent (especially for those companies with complex ownership structures) to prepare for the possibility that the CTA may be reinstated by gathering and organizing relevant data for a CTA filing.