The U.S. Supreme Court issued the following on January 23, 2025:
“Application (24A653) for stay presented to Justice Alito and by him referred to the Court is granted. The December 5, 2024 amended order of the United States District Court for the Eastern District of Texas, case No. 4:24–cv–478, is stayed pending the disposition of the appeal in the United States Court of Appeals for the Fifth Circuit and disposition of a petition for a writ of certiorari, if such a writ is timely sought. Should certiorari be denied, this stay shall terminate automatically. In the event certiorari is granted, the stay shall terminate upon the sending down of the judgment of this Court. Justice Gorsuch concurring in the grant of stay. (Detached Opinion). Justice Jackson dissenting in the grant of stay. (Detached Opinion).”
There are actually two nationwide injunctions in place from the U.S. District Court for the Eastern District of Texas. The above statement from the U.S. Supreme Court is as to one injunction. The Supreme Court is not allowing the first injunction preventing enforcement of the Corporate Transparency Act (CTA) to continue.
It is likely the U.S. District Court for the Eastern District of Texas or the U.S. Court of Appeals for the Fifth Circuit will suspend the second injunction in light of the Supreme Court decision. At that point, FinCEN (the agency responsible for CTA) will be able to enforce CTA and Beneficial Ownership Information (BOI) reporting will be mandatory. It is also at that point that FinCEN will be able to issue a statement regarding CTA BOI reporting deadlines.
FinCEN Update
On January 24, 2025, FinCEN posted the following alert:
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]
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.
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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.
Penalty Increase
The penalty for non-compliance with CTA goes up annually based on the U.S. Government applying an adjustment multiplier to certain federal fines / penalties. The previous penalty rate of $591 changed to $606 on January 17, 2025. Given this high daily penalty, it is important to have your data prepared in advance so that you are able to promptly prepare and file your BOIR if CTA becomes mandatory again.
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