This alert is current as of 3 p.m. MST, Jan. 29, 2025.
The United States Supreme Court stayed the decision of the Texas district court that had ordered a nation-wide injunction of the Corporate Transparency Act (CTA) earlier this month. However, a separate nation-wide injunction entered in another case remains in effect. It does not appear that the Trump Administration will be responding to these developments in the near term.
The result is that the reporting requirements of the CTA are currently voluntary for the foreseeable future.
For clarity, we provide a timeline of the various developments in courts regarding the CTA:
· On Dec. 3, 2024: In McHenry v. Texas Top Cop Shop, Inc., the U.S. District Court for the Eastern District of Texas issued a nation-wide preliminary injunction, temporarily pausing enforcement of the CTA’s reporting requirements.
· On Dec. 23, 2024: A motions panel of the U.S. Court of Appeals for the Fifth Circuit stayed the McHenry preliminary injunction, reinstating the CTA’s reporting obligations.
· On Dec. 26, 2024: A different panel—a merits panel—of the Fifth Circuit vacated the McHenry stay, reinstating the preliminary injunction pending a decision on the merits of that injunction.
· On Jan. 7, 2025: In Smith v. United States Department of the Treasury, the U.S. District Court for the Eastern District of Texas issued a similar nation-wide preliminary injunction, temporarily pausing enforcement of the CTA’s reporting requirements.
· On Jan. 23, 2025: The U.S. Supreme Court stayed the McHenry preliminary injunction, reinstating the CTA’s reporting requirements. Critically, the Supreme Court order was not a decision about the constitutionality of the CTA; rather, the decision related only to the nation-wide injunction itself. Further, the decision did not explicitly address the nation-wide injunction issued in Smith.
On Jan. 24, 2025, the U.S. Department of Treasury took the position that reporting is not required because the nation-wide injunction issued in the Smith case remains in effect. This is consistent with the position it has taken in the past that reporting is voluntary. The question remains as to whether the Trump Administration will appeal the case to the Fifth Circuit, though there is still time to do so. Additionally, the Department of Treasury has yet to file anything in Smith asking for the injunction to be lifted based on the Supreme Court’s decision in McHenry. As a result of these developments, the reporting requirements of the CTA are currently voluntary.
The final Fifth Circuit court ruling on the preliminary injunction in the McHenry case is anticipated in the coming months after oral argument is held on March 25, 2025. Following that argument, the Supreme Court could be asked to grant certiorari to hear the case on the merits, though the Supreme Court is not obligated to take the case. Given the ongoing legal proceedings, we recommend that all companies continue to gather the necessary information to file BOI reports, should the requirement be reinstated. While filing is currently voluntary, proactively preparing will facilitate compliance if mandatory reporting resumes.
Parsons’ CTA team will keep you updated on any further developments. Please contact us with any questions or concerns. [1]
Ross Keogh is the office managing shareholder and McKenna Ford an associate attorney in Parsons’ Missoula office. Ross leads Parsons’ CTA-dedicated legal team, which can be contacted by clicking here for additional information or guidance. To discuss this or related matters with Ross or McKenna, call 406.317.7220 or send an email to rkeogh@parsonsbehle.com or mford@parsonsbehle.com.
[1] The Trump Administration has not announced its position on the CTA and the ongoing litigation. In the event an announcement is made, we anticipate revising this update.
