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Update on Corporate Transparency Act

As previously reported, Judge Mazzant of the Eastern District of Texas issued a nationwide injunction preventing the federal government from enforcing the Corporate Transparency Act (CTA). Accordingly, beneficial owners were not required to submit their personal and business information to FinCen, the federal agency charged with enforcing the CTA.

On January 23, 2025, the Supreme Court granted the federal government’s request to stay Judge Mazzant’s injunction pending the disposition of the appeal

Although the Supreme Court’s decision seemingly indicated that beneficial owners would have to begin submitting reports to FinCen, there is yet another twist in the CTA saga.

Despite the Supreme Court’s ruling, enforcement of the CTA remains enjoined due to, yet another nationwide injunction issued by Judge Jeremey Kernodle, also a judge of the Eastern District of Texas, in Smith, et al. v. United States Dep’t of Treasury, et al., Case No. 6:24-cv-336 (E.D. Tex., Jan. 7, 2025) (the “Smith Injunction”).

In his ruling imposing the Smith Injunction, Judge Kernodle emphasized the “uncertainty of the Top Cop injunction, the differences between the arguments presented in that case and the present action, and the uniqueness of the parties here. . .”  Although reasonable minds may differ as to whether there is any true distinction in the reasoning behind the two injunctions, FinCen has already conceded that, in light of Smith, it is still unable to enforce the CTA.[1]

FinCen also clarified that reporting companies are “not subject to liability if they fail to file this information while the [Smith Injunction] remains in force.”[2]

The federal government has not yet appealed Judge Kernodle’s ruling. Business owners and other beneficial owners are encouraged to check FinCen’s website for updates on the status of the CTA.


[1] https://fincen.gov/boi.

[2] Id.