FinCEN Confirms Compliance with Corporate Transparency Act Remains Voluntary

01.24.2025

In response to the Supreme Court’s opinion released yesterday granting the government’s motion to stay the nationwide injunction issued in Texas Top Cop Shop, Inc. v. McHenry, the Financial Crimes Enforcement Network (“FinCEN”) confirmed compliance with the Corporate Transparency Act (“CTA”) remains voluntary.  On January 24, 2025, FinCEN posted the following alert on the Beneficial Owners Information website:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

In Smith v. U.S. Department of the Treasury, the plaintiffs challenged the constitutionality of the CTA and asked for a preliminary injunction against FinCEN’s enforcement of the CTA as well as a stay of the FinCEN final rule establishing the CTA’s compliance requirements and deadlines (“Reporting Rule”) pending judicial review.  On January 7, 2025, the federal district judge granted the plaintiff’s motion for preliminary injunction, prohibiting FinCEN’s enforcement of the CTA against the plaintiffs in the case.  In addition, the federal district judge stayed the effective date of the Reporting Rule pursuant to 5 U.S.C. § 705, which allows a court to issue  “…all  necessary  and  appropriate  process  to  postpone  the  effective  date  of  an  agency  action  or  to  preserve  the  status  or  rights  pending conclusion of the review proceedings.”  Anticipating a challenge to the breadth of the stay of the Reporting Rule, the court notes that “…nothing in the text of Section 705, nor of Section 706, suggests that either preliminary or ultimate relief under the APA needs to be limited’ to the parties before the Court.”  Although it is still within the window to appeal the district court’s order in Smith, the government has yet to file such an appeal.

One other issue that we must remember is that we have a new administration in the White House with new goals and priorities.  One of President Trump’s first executive orders was entitled “Regulatory Freeze Pending Review,” which, among other things, postponed “…for 60 days from the date of this memorandum the effective date for any rules that have been published in the Federal Register, or any rules that have been issued in any manner but have not taken effect, for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.”  Although FinCEN does not cite this executive order in its announcement that compliance remains voluntary, this pause in enforcement of the CTA seems to be in keeping with this administration’s broader goals. 

The implementation of the CTA has been a rollercoaster for reporting companies and their advisors.  For the moment, compliance with the CTA remains voluntary and any reporting company that does not file beneficial ownership information will not be subject to liability.  However, it is important to remember that the current stay is temporary and the question of whether the CTA is unconstitutional has not been finally determined.  We recommend that all reporting companies gather the information needed to complete its beneficial ownership filing in case the current stay is lifted and the CTA is ultimately deemed constitutional.  Our team will continue to monitor the legal developments surrounding the CTA, and we are here to answer any questions you may have about the CTA.

About Maynard Nexsen

Maynard Nexsen is a full-service law firm with more than 550 attorneys in 24 offices from coast to coast across the United States. Maynard Nexsen formed in 2023 when two successful, client-centered firms combined to form a powerful national team. Maynard Nexsen’s list of clients spans a wide range of industry sectors and includes both public and private companies. 

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