The Financial Crimes Enforcement Network (FinCEN) announced on Friday, January 24, that reporting companies are not currently required to file beneficial ownership information (BOI) under the Corporate Transparency Act (CTA). Despite the recent decision by the Supreme Court of the United States (“SCOTUS”) to overturn the nationwide injunction of the CTA in connection with Texas Top Cop Shop Inc., reporting obligations remain voluntary at this time.
The Texas Top Cop Shop Injunction
On Thursday, January 23, SCOTUS issued a decision overturning a nationwide injunction of the CTA (the “Texas Top Cop Shop Injunction”), an injunction that had previously been overturned and subsequently reinstated by two separate panels of the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) on December 23 and December 27, respectively. The Texas Top Cop Shop Injunction has been litigated in connection with the case of McHenry v. Texas Top Cop Shop, Inc. (formerly, Texas Top Cop Shop v. Garland). In accordance with Thursday’s decision by SCOTUS, the Texas Top Cop Shop Injunction has been overturned.
The Smith Injunction
Separately from the case of Texas Top Cop Shop, another nationwide injunction of the CTA is in place, (the “Smith Injunction”). The Smith Injunction was issued by a Texas district court in connection with the case Smith v. U.S. Department of the Treasury. Thus, despite the decision by SCOTUS to strike down the Texas Top Cop Shop Injunction, another nationwide injunction, the Smith Injunction, remains in place. FinCEN has confirmed that so long as the Smith Injunction stands, BOI reporting under the CTA shall remain voluntary.
The ongoing legal battles over the CTA are far from over, and the Fifth Circuit expects to hear oral arguments in the case of Texas Top Cop Shop Inc. on March 25. Stay tuned.