On January 23, 2025, the U.S. Supreme Court lifted an injunction[1] that had blocked enforcement of the CTA and its regulations, as originally issued by the U.S. District Court for the Eastern District of Texas on December 3, 2024. in the case of Texas Top Cop Shop, Inc. v. Garland.[2]
Nevertheless, for the time being, enforcement of the CTA reporting requirements is still enjoined by a separate injunction issued January 7, 2025, by the same federal district court, but in a different case: Smith v. United States Department of the Treasury.[3]
FinCEN has clarified on its website as of the morning of January 24, 2025, that, as a result of the Smith injunction, “reporting companies” are still not required to submit Beneficial Ownership Information Reports (“BOIR”) and will not face liability for failing to do so while the injunction remains in place, though reporting companies may submit BOIR voluntarily.[4]
Litigation and appeals pertaining to the CTA continue. To avoid potential legal liability, those reporting companies that have not already either met their reporting obligations or determined that they are exempt under the CTA must be prepared to submit their BOIR to FinCEN if the law is ultimately upheld and enforced. Willful failure to file the information required by the CTA could result in civil or criminal penalties.[5]
[1] Mchenry v. Texas Top Cop Shop, Inc., No. 24A653, 604 U. S. ____ (Jan. 23, 2025) (granting stay of the amended order issuing the injunction).
[2] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478, 2024 U.S. Dist. LEXIS 218294, at *112–14 (E.D. Tex. Dec. 3, 2024).
[3] Smith v. United States Dep’t of the Treasury, No. 6:24-CV-336, 2025 U.S. Dist. LEXIS 2321, *37-38 (E.D. Tex. Jan. 7, 2025).
[4] Financial Crimes Enforcement Network, BOI |Beneficial Ownership Information, https://www.fincen.gov/boi (last visited Dec. 24, 2024 10:30 AM) (see the section titled, “Alert: Ongoing Litigation – Texas Top Cop Shop, Inc., et al. v. McHenry, et al., No. 4:24-cv-00478 (E.D. Tex.) & Voluntary Submissions [Updated January 24, 2025]”).
[5] For detailed discussion and explanation of the CTA and FinCEN’s regulations, see our firm’s previous post on the CTA here.
