Supreme Court Allows CTA Enforcement, but Questions Remain

On January 23, 2025, the U.S. Supreme Court granted the Secretary of the Treasury’s application to lift a nationwide injunction that had paused enforcement of the Corporate Transparency Act (CTA). The injunction, issued in Texas Top Cop Shop, Inc. had temporarily halted FinCEN’s requirements for businesses to file Beneficial Ownership Information (BOI) reports under the CTA. As previously reported, passed by Congress in 2021, the CTA aims to prevent illicit financial activities by increasing transparency in business ownership.

The Court’s ruling is procedural, addressing whether a U.S. District Court can issue last-minute nationwide injunctions that disrupt the enforcement of federal laws. It does not address the substantive challenge to the CTA’s constitutionality—namely, whether the law exceeds Congress’s authority under the Commerce Clause. The Court’s decision allows the FinCEN reporting requirements to proceed as if no injunction had been issued. The broader constitutional question will likely remain unresolved for years as the case progresses through the Fifth Circuit and potentially back to the Supreme Court.

Implications of the Ruling

The Supreme Court’s decision signals disfavor toward nationwide preliminary injunctions. This precedent likely affects similar cases, such as Smith v. U.S. Department of the Treasury, where another federal judge in Texas issued a nationwide injunction against the CTA. The Treasury Department may need to formally appeal that order to the Fifth Circuit, which is likely to nullify it based on the Supreme Court’s ruling in Texas Top Cop Shop.

Political Considerations

Uncertainty also looms over how the new administration might approach the CTA. While the law itself requires congressional repeal, enforcement could be delayed through executive action. The Trump Administration’s position remains unclear; while the administration previously supported the CTA, it might now view BOI reporting as an unnecessary regulatory burden.

Bottom Line

With the preliminary injunctions lifted, FinCEN is expected to resume enforcing BOI reporting requirements and is likely to announce a new compliance deadline within the coming months. Unless further legal or political developments arise, companies should prepare to file their BOI reports soon. Experts do anticipate a grace period to allow businesses time to comply but also note failure to act could result in penalties once enforcement begins in earnest.

Dykema will continue to assist clients with entity formations and filings with the secretary of state or any similar offices and is happy to assist if analysis is required with respect to what information may be necessary for the filing. To understand your responsibilities under the CTA, click here.

For more information regarding the CTA or how the new developments around the CTA may impact your business, please contact your local Dykema relationship attorney.