The Corporate Transparency Act (“CTA”) continues to take reporting companies on a roller coaster ride. Now, there are not just one, but two Eastern District of Texas federal cases challenging the requirement for certain companies to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (“FinCEN”).
While you should hold on tight with your seatbelt fastened, the bottom line is that, for the time being, the reporting requirements are still on hold.
What’s Happening?
Two separate cases in the Eastern District of Texas have led to nationwide injunctions blocking enforcement of CTA’s beneficial ownership reporting requirements. The Supreme Court of the United States briefly reinstated the reporting requirement in Texas Top Cop Shop v. Garland, but a second case, Smith v. U.S. Department of the Treasury, has put reporting on hold again. Now, the government has appealed the Smith injunction with FinCEN indicating it will briefly extend reporting deadlines and potentially modify its requirements altogether for lower-risk entities, should the government succeed.
What It Means for Businesses:
✅ No Immediate Filing Required – Companies are NOT currently required to file beneficial ownership information within FinCEN.
✅ No Penalties for Missed Deadlines – Entities that missed earlier deadlines will not face penalties while the injunctions are in place.
✅ Assess Your Status and Compile Information – Determine if your entity qualifies as a “reporting company,” and if so, continue to gather BOI and stay on top of ownership changes.
✅ Stay Informed – The legal status of the CTA is evolving quickly with the potential for revised requirements or quickly reinstated deadlines.
✅ Voluntary Reporting – You can still submit reports to FinCEN, but it’s not required.
Our CTA team will keep you updated on the latest developments. To read the full Client Alert, visit here.
For more information on our CTA team, visit their bios here:
Lorren Patterson
Paul-Kalvin Collins
Japera Parker