Legal Alert: THE SAGA CONTINUES: Enforcement of the CTA is Still Halted, Despite U.S. Supreme Court Ruling

On January 23, 2025, the United States Supreme Court granted the Government’s request to stay the nationwide preliminary injunction of the Corporate Transparency Act (“CTA”) issued by a Texas district court in December 2024 in relation to the Texas Top Cop Shop, Inc. v. McHenry (“Texas Cop Shop”) case. However, despite the Supreme Court’s ruling in Texas Cop Shop, reporting companies are still not obligated to comply with the CTA or its related reporting requirements.

The reason reporting companies are still not required to file beneficial ownership information (“BOI”) with FinCEN is because another federal Texas district judge issued an injunction and nationwide stay in a separate case, Smith v. U.S. Department of the Treasury (“Smith”). On January 7, 2025, the court in Smith found that the CTA is likely unconstitutional, enjoined the Treasury Department from enforcing the CTA against the Plaintiffs, and stayed the reporting requirements nationwide.

In this evolving legal landscape, FinCEN issued a statement on the ongoing litigation, informing reporting companies that, despite the Supreme Court’s order, the nationwide stay issued in Smith remains in place. Consequently, reporting companies are not required to file BOI with FinCEN, though they may do so voluntarily.

Additionally, FinCEN has issued an alert warning reporting companies about fraudulent activity geared towards obtaining an entity’s BOI. Reporting companies should avoid any correspondence requesting that the entity fill out a “Form 4022” or “Form 5102” and any correspondence referencing the “US Business Regulations Dept.” FinCEN does not have a “Form 4022” or “Form 5102,” and there is no government entity with the name “US Business Regulations Dept.”  FinCEN further advises reporting companies to stay alert for other types of suspicious activity, including the following:

• Any correspondence requesting payment or fees of any kind. FinCEN does not charge any fees for BOI filings submitted through its official filing system.
• Any correspondence containing URLs, links, or QR codes purporting to be from FinCEN. All legitimate BOI filings must be submitted through FinCEN’s official website.
• Any correspondence regarding penalties. FinCEN does not send any correspondence regarding penalties over the phone or by email. FinCEN similarly warns against submitting payments via phone, mail, or websites because any request to do so is fraudulent.

While compliance with the CTA’s reporting requirements remains voluntary during the pendency of the nationwide stay, reporting companies may still elect to file BOI with FinCEN. For guidance regarding the status of the injunction and stay, the applicability of the CTA to your specific entity, or assistance with the BOI filing process, please contact the Kessler Collins team for assistance.