The Government has now elevated the question of the enforceability of the Corporate Transparency Act (CTA) to the Supreme Court. In earlier alerts, we described the litigation in the U. S. District Court for the Eastern District of Texas and the United States Court of Appeals for the Fifth Circuit in the case Texas Top Cop Shop, Inc., et al. v. Garland, et al. The status of this District Court and Fifth Circuit litigation is that on December 26, 2024, the Fifth Circuit restored the District Court’s injunction which blocks the enforcement of the CTA and its Beneficial Ownership Information (BOI) filing obligations on a nationwide basis (see our Legal Alert from December 27, 2024).
In its latest move, on December 31, 2024, the Government filed its Application for a Stay of the Injunction Issued by the United States District Court for the Eastern District of Texas with the U.S. Supreme Court to stay the District Court’s nationwide injunction blocking the enforcement of the CTA. The Government also suggests that the Supreme Court may wish to treat the emergency application as a petition for a writ of certiorari before judgment on the question of whether the District Court erred in entering preliminary relief on a universal (nationwide) basis. If the writ of certiorari is granted, the Supreme Court would be able to hear the arguments for the applicability of the injunction this term.
What To Do Next:
As of this Legal Alert, the nationwide injunction of the CTA remains in effect. FinCEN has stated that reporting companies may continue to voluntarily submit BOI Reports. Reporting companies that have yet to file a BOI Report, and are not exempt from the CTA’s reporting requirements, should closely follow developments in the case as the appeals process is moving rapidly with multiple changes as to whether a reporting company must comply with the CTA. Because of the volatility of the question of whether the nationwide injunction will remain in place, it may be prudent for reporting companies to continue gathering the necessary information to file a BOI Report or to decide to file BOI Reports on a voluntary basis so that they will be in a position to comply if the injunction is lifted.
We are following developments relating to the Texas Top Cop Shop case and plan to provide further updates. If you have any questions related to the CTA or the recent rulings, please reach out to your SGR attorney or any of the individuals listed below.
Tom Hong (Atlanta/Austin/Charlotte)
Brett Lockwood (Atlanta/Austin/Charlotte)
Eric Breitman (New York/Washington D.C.)
Adam Buss (Jacksonville/Miami/Tampa)
Peter Rho (Los Angeles)
Ben Graham-Evans (London)
Michael Kraus (Atlanta – German Practice)
Stefan Buske (Munich)
Nicola Fiordalisi (Milan – Italian Practice)
For more information about the CTA, CLICK HERE.
***Updated as of January 6, 2025