
(Jan. 24, 2025) If you have whiplash from the rollercoaster ride of the legal status of the Corporate Transparency Act (CTA), you’re not alone. The law, aimed at increasing corporate ownership transparency and combatting money laundering, has been caught in a whirlwind of legal challenges, court rulings, and legislative uncertainty that has left business owners and legal professionals alike feeling a bit dizzy. Yesterday, the Supreme Court issued a decision in the Texas Top Cop Shop, Inc., et al. v. Garland case that created a new chapter in this saga and has left many wondering where the law currently stands and whether they are required to submit beneficial ownership filings to the Financial Crimes Enforcement Network (FinCEN).
History of Recent Legal Challenges
On December 3, 2024, District Judge Amos L. Mazzant III, a judge for the U.S. District Court for the Eastern District of Texas, granted a preliminary injunction in the Texas Top Cop Shop case, halting enforcement of the CTA nationwide. The United States government immediately appealed the District Court’s decision to the U.S. Court of Appeals for the Fifth Circuit. Initially, the Fifth Circuit granted the government’s emergency motion and stayed the injunction granted by the District Court, thus reinstating the CTA. However, the Fifth Circuit quickly reversed course and vacated the stay in its December 26th order, which reinstated the District Court’s injunction and paused enforcement of the CTA once again. The government quickly appealed this decision to the Supreme Court of the United States.
While the Texas Top Cop Shop case was working its way through the courts, a separate challenge to the CTA was also brewing in the Eastern District of Texas in the Smith et al. v. United States Department of the Treasury et al. case. The plaintiffs in Smith also challenged enforcement of the CTA, arguing that it infringed upon their constitutional rights. On January 7, 2025, while the Texas Top Cop Shop case sat at the Supreme Court, District Judge Jeremy D. Kernodle also issued a nationwide preliminary injunction in the Smith case that once again halted enforcement of the CTA.
The injunction granted in the Smith case did not receive the same level of attention as the injunction granted on December 3rd in the Texas Top Cop Shop case, which was likely due to the fact that, at the time, it did not change the status of the CTA’s enforcement; the CTA continued to be enjoined by the injunction granted in the Texas Top Cop Shop case at the time the Smith injunction was issued, so the decision merely added insult to injury to proponents of the CTA. Unlike in the Texas Top Cop Shop case, the government has not appealed the injunction granted in Smith, meaning that the injunction in Smith currently remains in place.
The Supreme Court’s Most Recent Ruling
Yesterday, the Supreme Court finally weighed in on the Texas Top Cop Shop case, granting the government’s motion and vacating the December 3rd injunction previously granted by District Judge Amos L. Mazzant III. The Supreme Court’s decision was extremely brief and did not address the substance of the legal challenges to the CTA. While this decision vacated the injunction that originally halted enforcement of the CTA in the Texas Top Cop Shop case, it has no effect on the injunction granted in Smith, which also prevents enforcement of the CTA on a nationwide level. FinCEN confirmed in a statement issued this morning that, despite yesterday’s Supreme Court decision in Texas Top Cop Shop, enforcement of the CTA remains on pause pursuant to the order issued by District Judge Jeremy D. Kernodle in Smith on January 7th.
A New Administration Could Mean a Change in Course
With a new administration settling in, we are left guessing whether an appeal of the Smith decision is in the works. It is currently unknown whether the Trump administration will push for enforcement of the CTA and challenge the injunction granted in Smith (which, if appealed, will most certainly be vacated, thus resulting in immediate reinforcement of the CTA) or if the government will let the injunction in Smith stand while the constitutionality of the CTA is decided on its merits in Texas Top Cop Shop. So far, there’s been no official word, meaning small business owners and compliance professionals remain in limbo.
A New Bill Throws Another Curveball
As if things weren’t already complicated enough, a recent bill has been introduced in Congress that aims to eliminate the CTA entirely. This legislative effort underscores the ongoing debate over whether the law’s benefits outweigh the compliance burdens it places on businesses. If passed, the bill could bring a definitive end to the CTA saga—but until then, we’re left watching the drama unfold in the court system.
What Should Business Owners Do Now?
For now, business owners—whether running a small LLC or a sophisticated corporate structure—should stay informed but avoid making any hasty compliance moves. With the law currently blocked from enforcement, there’s no immediate action required, but that could change depending on future court decisions or legislative actions.
The CTA’s journey through the courts has been anything but straightforward, and it is uncertain what the future holds for the CTA. Phillips Murrah is continuing to closely monitor developments in this area and will provide updates as the Texas Top Cop Shop and Smith cases continue to work their way through the courts. In the meantime, if you have any questions about the CTA, please contact Kayla Kuri at kmkuri@phillipsmurrah.com or your regular Phillips Murrah representative.
For the latest information on the status of the Corporate Transparency Act, please visit our Corporate Transparency Act Hub.
About the author:
Kayla M. Kuri is a Director and a corporate attorney who represents clients in a wide range of commercial and business matters, including mergers and acquisitions, real estate transactions, private securities offerings, commercial financing transactions, and commercial contract drafting and negotiation.
CONTACT: kmkuri@phillipsmurrah.com | 405.552.2419
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