Author: Laurence V. Parker, Jr.
Corporate Transparency Act (CTA) news in January and December 2024 has been plentiful.[1] Here is the running recap of significant December and January events:
- On December 3, 2024, Judge Amos L. Mazzant of the United States District Court for the Eastern District of Texas, Sherman Division[2] issued a nationwide, preliminary injunction against the enforcement of the CTA, in Texas Top Cop Shop v. Garland.
- Mid-afternoon on December 23, 2024, the United States Court of Appeals for the Fifth Circuit stayed the Texas Top Cop Shop v. Garland nationwide preliminary injunction reinstating the CTA, and by implication, the December 31, 2024, compliance deadline for reporting companies formed before January 1, 2024.[3]
- Later in the evening of December 23, 2024, FinCEN extended certain compliance deadlines because of the injunction and its subsequent stay by the Fifth Circuit.[4]
- On December 26, 2024, the full panel of the United States Court of Appeals stayed the portion of the December 23, 2024, order of the Fifth Circuit’s motions panel that lifted the Texas Top Cop Shop v. Garland nationwide injunction.[5] As such, the nationwide injunction first issued in Texas Top Cop Shop v. Garland on December 3, 2024, was put back into effect.
- On January 7, 2025, in Smith v. U.S. Department of the Treasury,[6] the Eastern District of Texas, Tyler Division, imposed a separate nationwide inunction on enforcement of the Corporate Transparency Act’s Report Rule, based on Sections 705 and 706 of the Administrative Procedure Act.[7]
- On January 23, 2025, the U.S. Supreme Court stayed the injunction first imposed the Texas Top Cop Shop v. Garland.[8]
FinCEN’s website provides guidance for companies on how to approach this evolving CTA situation:
"On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports."[9]
Williams Mullen will continue to monitor the impact of these and other rulings, subsequent actions by the courts, and any ensuing appeals along with FinCEN’s implementation of the CTA. We will provide updates and alerts when warranted.
[1] The CTA was enacted into law on January 1, 2021, as part of the Anti-Money Laundering Act of 2020. See, William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Pub. L. 116-283, 134 Stat. 3388 §§ 6001-6511 (2020).
[2] Texas Top Cop Shop, Inc., et al., v. Merrick Garland, Attorney General of the United States, et al., Civil Action No. 4:24-CV-478 (December 3, 2024, E.D. Texas). A copy of the court’s order is available here.
[3] Texas Top Copy Shop, Inc., et al., v. Merrick Garland, Attorney General of the United States, et al., Civil Action No. 4:24-CV-478 (December 23, 2024, 5th Circuit). See a copy of the Fifth Circuit’s order here.
[4] See FinCEN Release located here.
[5] Texas Top Copy Shop, Inc., et al., v. Merrick Garland, Attorney General of the United States, et al., Civil Action No. 4:24-CV-478 (Order No. 24-40792, December 26, 2024, 5th Circuit). A copy of the court’s order is available here.
[6] Smith v. U.S. Department of the Treasury, 2025 WL 41924 (E.D. Texas, January 7, 2025). A copy of the order is available here.
[7] 5 U.S.C. §§ 705, 706.
[8] McHenry v. Texas Top Cop Shop, Inc., 2025 WL 272062 (Memorandum Opinion, January 23, 2025). A copy of the order is available here.
[9] See FinCEN Release located here.
