More Court Ordered Whiplash on Beneficial Ownership Information Filings under the Corporate Transparency Act

January 28, 2025

What happened?

On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay the nationwide preliminary injunction issued by a Texas district court in Texas Top Cop Shop, Inc. This would mean that the reporting of Beneficial Ownership Information under the Corporate Transparency Act (CTA) is back on.  However, on January 7, 2025, a separate case in Texas district court (Smith v. U.S. Department of Treasury) put those reporting obligations on hold with a separate nationwide preliminary injunction. Reporting obligations are still on hold under this separate injunction for now.

For those following the bouncing ball of CTA reporting obligations, recent history has turned reporting obligations on and off as follows:

1. ON – The CTA was adopted, requiring U.S. entities to disclose beneficial ownership information in a filing due by January 1, 2025.
2. OFF– December 3, 2024, a Texas district court judge entered a preliminary injunction barring the enforcement of the January 1, 2025, deadline (Texas Top Cop Shop, Inc.).
3. ON – December 23, 2024, a motions panel of the Fifth Circuit Court of Appeals granted a stay of the preliminary injunction, and FinCEN announced an extended deadline for filing beneficial ownership information of January 13, 2025.
4. OFF – On December 26, 2024, a merits panel of the Fifth Circuit Court of Appeals reversed the motions panel and reinstated the preliminary injunction.
5. ON but still OFF – January 23, 2025, the U.S. Supreme Court granted a stay of the Texas Top Cop Shop, Inc. injunction, but a separate injunction from January 7, 2025, in Smith was not before the court. The federal court order in Smith continues to bar enforcement of CTA’s beneficial ownership filing requirements for now.

FinCEN responded on January 24, 2025, with the following announcement:

“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.” January 24, 2025, FinCEN alert from https://fincen.gov/boi

What does this mean for me? 

As this issue filters through the courts, the filing deadline could continue to change. FinCEN indicated that entities can voluntarily file beneficial ownership information, and many entities already filed in 2024 when the original deadline looked to be enforceable. It may be easier to voluntarily file instead of trying to keep up with the on-again, off-again nature of the filing deadline. Voluntarily filing would also avoid the daily monetary penalty that an entity would face if a deadline for CTA becomes enforceable again and the entity does not file in time.

At a minimum, consider reviewing your obligations under CTA, gathering the necessary information to report beneficial ownership, and preparing a filing. If you choose to wait rather than voluntarily file, consider coordinating with legal counsel for assistance to ensure you are kept abreast of any changes.