The Corporate Transparency Act (CTA) remains on hold due to a nationwide injunction granted by a federal District Court in Texas in Smith v. U.S. Department of the Treasury. However, given pending legal battles and legislative movements under the new administration, the status of the CTA could be facing imminent change.
While there are several pending legal proceedings with respect to the CTA, the two most prominent are summarized below.
(1) Smith, et al. v. U.S. Department of Treasury, et al. On January 7, 2025, a federal District Court in Texas issued an order suspending the application of the CTA’s reporting rules nationwide. However, the U.S. government filed an appeal of the District Court’s decision along with a motion to stay the preliminary injunction, pending the appeal. The plaintiffs filed their response to the government’s motion on February 14, 2025. We believe a ruling on the motion is imminent. Should the court grant the motion to reinstate the CTA during the appeal process, the CTA and its reporting requirements could return immediately. Notably, FinCEN acknowledged that it would provide reporting companies with 30 days to file.
(2) Texas Top Cop Shop, Inc., et al. v. McHenry, et al. The merits of the CTA still remain in limbo in the case of Texas Top Cop Shop as the parties work through the briefing schedule set by the 5th Circuit Court of Appeals, culminating in oral arguments on March 25, 2025. Unless the U.S. Government’s motion to reinstate the CTA in Smith is granted, the earliest we would likely see the CTA and its reporting requirements reinstated would be after the oral arguments on March 25.
There are also currently two notable legislative movements with respect to the CTA.
(1) CTA to be repealed? The “Repealing Big Brother Overreach Act,” which seeks to repeal the CTA, was reintroduced on January 15, 2025. The bill’s mission is to eliminate the CTA’s reporting requirements. As of now, the House of Representatives has not passed the bill. It is uncertain whether this bill will have sufficient support moving forward.
(2) CTA deadline extension? Another bill that has gained more ground was introduced on January 24, 2025, titled the “Protect Small Businesses from Excessive Paperwork Act.” The bill seeks to extend the CTA’s reporting deadline to January 1, 2026. Despite being introduced later than the Repealing Big Brother Overreach Act, the bill was passed by the House of Representative with a unanimous vote and now moves to the Senate. On February 11, the Senate referred the bill to the Committee on Banking, Housing, and Urban Affairs.
The future of the CTA remains uncertain. We recommend staying informed by monitoring developments closely and organizing CTA filing information to ensure readiness if enforcement resumes.
