SCOTUS weighs in on the CTA but the nationwide injunction remains
On January 23, 2025, the Supreme Court of the United States granted relief to the federal government in Texas Top Cop Shop, Inc., et al. v. McHenry, et al., No. 4:24-cv-00478 (E.D. Tex.) (formerly, Texas Top Cop Shop v. Garland) concerning enforcement of the beneficial ownership interest reporting requirements (the “Reporting Rule”) under the Corporate Transparency Act (“CTA”). Essentially, the high Court granted a stay of the nationwide injunction imposed by the lower courts. This is yet another reversal in the continuing saga.
However, this action is effectively moot because of a different decision in a separate case, Smith, et al. v. U.S. Department of the Treasury, et al., No. 6:2024-cv-00336 (E.D. Tex. 2025). In Smith, the U.S. District Court for the Eastern District of Texas ordered a nationwide injunction preventing the federal government from enforcing the Reporting Rule. This injunction not only applied to the parties involved in that matter, but also to non-parties (i.e., to all U.S. businesses). In that January 7 opinion, the Court wrote: “Accordingly, the Court STAYS the effective date of the Reporting Rule (31 C.F.R. § 1010.380) while this lawsuit is pending.” Smith, et al. v. U.S. Department of the Treasury, et al., No. 6:2024cv00336 (E.D. Tex. 2025), Dkt 30 at p. 34.
This means businesses still have no obligation to comply with the Reporting Rule, notwithstanding the high Court’s January 23 ruling. Reporting under the CTA remains voluntary.
FinCEN has made this clear, posting this on its website:
Nevertheless, businesses should continue to prepare to report by gathering all necessary information and documentation. The status of this nationwide injunction can change at any moment, and businesses may be required to comply with little notice.
Mulhall Zion LLC continues to monitor these cases and the challenges to the CTA and remains ready to assist clients with questions concerning the CTA. Please contact Mulhall Zion LLC if you would like to discuss your business, the Reporting Rule, and other matters related to the CTA. We will continue to post updates as these matters progress.
