In recent blog posts, we have provided updates on the fits and starts of the Corporate Transparency Act (CTA or Act). Since the CTA went into effect on January 1, 2024, the courts have gone back and forth on the constitutionality of the Act. Last week, the U.S. Supreme Court put the CTA back on the books by lifting an injunction against enforcement of the CTA imposed by the U.S. District Court of the Eastern District of Texas in Texas Top Cop Shop v. McHenry. This clears a way for the government to move ahead with enforcement until oral arguments in the U.S. Court of Appeals for the Fifth Circuit in late March.
However, because a separate order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) remains in place, reporting obligations are currently suspended. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clarified on their website on January 24, 2025, that registration is still voluntary:
"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.”
Businesses should continue to monitor this situation closely since it is possible courts could pave a path for the government to proceed with enforcement of the CTA. It’s equally possible, however, that the courts could overturn it or that Congress could act to repeal it. Further, it remains to be seen which way President Trump, who opposed the Act during his first term, will swing the pendulum.
We will continue to monitor further court decisions and guidance provided by FinCEN in response to the latest decision. If you have questions regarding the CTA, please contact Joshua B. Beisker at 585-258-2879 or jbeisker@underbergkessler.com.