CTA Filings Remain Voluntary, FinCEN Confirms, Despite Supreme Court Decision
As noted in our previous Corporate Transparency Act (CTA) update, the Supreme Court was considering an application — filed by the Government prior to the change in Presidential administrations — to stay a nationwide injunction on CTA enforcement issued by a federal district court in Texas Top Cop Shop, Inc. v. McHenry. While the Supreme Court granted the Government’s request for a stay, FinCEN has confirmed that a nationwide injunction remains in effect because the Supreme Court’s decision did not directly impact a separate nationwide injunction issued by another judge in a separate case filed in the same district court (Smith v. U.S. Department of the Treasury).
As a result, CTA filings remain voluntary at this time, and companies will not be subject to liability if they elect not to file beneficial ownership information while the Smith injunction remains in force.
Following the inauguration of President Trump on January 20, the Department of Justice and FinCEN have shown no overt signs of litigating enforcement of the CTA as actively as the Biden administration. It is possible the new administration will be content with the status quo as the Fifth Circuit gears up for en banc oral arguments in the Texas Top Cop Shop case in March. However, it is also possible that the CTA could be revamped through Congressional and/or administrative action, or significantly delayed or even repealed to address objections raised in litigation and policy discussions over the last year.
Of course, Miller Johnson continues to monitor this litigation and other moving pieces closely. We encourage you to remain in contact with the Miller Johnson CTA task force and other advisors to prepare for the potential contingencies and scenarios that may unfold in the coming weeks and months.