The Corporate Transparency Act in Limbo: What the Supreme Court's Stay Actually Changes

Two injunctions, not one

The Corporate Transparency Act (CTA) was enacted on January 1, 2021, as part of the National Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-283). It requires most corporations, limited liability companies, and similar entities — "reporting companies" — to disclose their beneficial owners to the Treasury Department's Financial Crimes Enforcement Network (FinCEN). The implementing rule took effect January 1, 2024, with existing entities directed to file by January 1, 2025, and entities formed during 2024 given 90 days from formation.

Then the litigation arrived, and it did not arrive cleanly. By late January 2025 there were two distinct federal court orders blocking the regime nationwide, issued by two different judges in two different cases. Understanding why both matter is the whole point — because the news cycle has collapsed them into one, and that conflation is producing bad compliance decisions.

The first case is *Texas Top Cop Shop, Inc. v. McHenry* (formerly *v. Garland*). On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a nationwide preliminary injunction against the CTA. The Fifth Circuit's motions panel stayed that injunction on December 23, briefly reinstating the law; its merits panel vacated that stay on December 26, blocking the law again. The government took the question to the Supreme Court, which on January 23, 2025, granted a stay of the district court's injunction pending appeal. Justice Gorsuch concurred; Justice Jackson dissented.

The second case is *Smith v. U.S. Department of the Treasury*, a separate action in the same district before a different judge. On January 7, 2025, that court issued its own order — and it did more than enjoin enforcement. It stayed the effective date of the reporting rule nationwide. The Supreme Court's January 23 stay addressed only the *Texas Top Cop Shop* injunction. It did not touch the *Smith* order. As of February 2025, the *Smith* order remains in force.

What that means in practice

The result is the kind of split outcome that rewards careful reading and punishes skimming. The most-covered injunction has been lifted. A second, less-covered injunction has not. And because the *Smith* order independently suspends the reporting rule on a nationwide basis, the practical effect is unchanged: there is no live filing obligation right now.

FinCEN has confirmed this directly. In a public notice following the Supreme Court's stay, the agency stated that reporting companies are not currently required to file beneficial ownership information and are not subject to liability for failing to do so while the *Smith* order remains in force — though companies may continue to submit reports voluntarily.

So the honest status, as of this writing, is suspension. Not repeal, not a safe harbor, not a deadline that has quietly passed. Suspension, resting on a single district-court order that the government is actively appealing. On February 5, 2025, the Department of Justice filed a notice of appeal of the *Smith* order and moved to stay it pending appeal. If that motion is granted, the last nationwide block falls and the filing requirement returns — potentially on short notice.

Why "prepare, don't file" is the defensible position

There is a temptation, when a deadline disappears, to treat the obligation as gone. That reading does not hold. The CTA statute is intact. The reporting rule is intact. What is absent is a court's permission to enforce them at this moment — and that absence is contingent, contested, and reversible by a single ruling on a pending motion.

A reporting company that treats the current pause as permanent is accepting a specific risk: that the *Smith* stay is lifted, FinCEN sets a new deadline with limited lead time, and the company is left assembling beneficial-ownership information under time pressure rather than at its own pace. The information itself is not trivial to gather — full legal names, dates of birth, addresses, and identifying-document details for every individual who owns or controls 25 percent or more of the entity, plus those who exercise substantial control.

The position that survives whatever the courts do next is the prepared one. That means identifying every entity in the structure that would qualify as a reporting company, confirming which exemptions apply, and assembling the beneficial-ownership data set now — so that if the requirement snaps back, filing is a matter of submission, not investigation. It does not mean filing today. Voluntary filing is permitted, but it commits information to a regime whose final shape is still being litigated, with no offsetting benefit while the suspension holds.

Key takeaways

• The Supreme Court's January 23, 2025 stay lifted the *Texas Top Cop Shop* injunction but did not lift the separate *Smith v. Treasury* order of January 7, 2025, which still suspends BOI reporting nationwide.
• FinCEN has stated that reporting companies are not currently required to file and face no liability for not filing while the *Smith* order stands; voluntary filing remains available.
• The suspension is contingent. The government's appeal of the *Smith* order, and its pending motion to stay that order, could restore the filing requirement on short notice.
• The defensible course is to assemble beneficial-ownership information now and be ready to file, without filing while the requirement is suspended.

Frequently asked questions

Is my company required to file a BOI report right now?

No. As of February 2025, because of the nationwide order in *Smith v. U.S. Department of the Treasury*, FinCEN has stated that reporting companies are not currently required to file and are not subject to liability for not filing while that order remains in force.

The Supreme Court ruled in January. Doesn't that put reporting back in effect?

The Supreme Court stayed only the injunction in the *Texas Top Cop Shop* case. A second, independent nationwide order in the *Smith* case was not before the Court and remains in effect, so the practical suspension continues.

Should we file voluntarily to be safe?

Voluntary filing is permitted but is not required and carries no compliance benefit while the requirement is suspended. The more measured approach is to gather the required information and be positioned to file quickly if the suspension is lifted, rather than committing data to a regime still under active litigation.

What would change the situation?

If the court in *Smith* stays its own order, or an appellate court does, the nationwide suspension would end and FinCEN would be expected to announce a revised filing deadline. Because that could happen with limited lead time, readiness is the point.

Bottom line

The CTA is not gone, and it is not in effect. It is paused on a contingent footing that a single court order could change. Closely held businesses should use this window to prepare a complete, accurate beneficial-ownership record — and hold it ready — rather than treating the absence of a deadline as the absence of an obligation.