Supreme Court Grants Stay for One CTA Case, But Other Injunction Remains

Justice Alito granted the federal government’s request in Texas Top Cop Shop to stay a nationwide injunction against enforcement of the Corporate Transparency Act (CTA) on January 23, 2025. However, due to another federal district court placing a nationwide injunction against enforcement while this case was before the Supreme Court, FinCEN has announced that it will still not enforce the requirements. In light of the continuing injunction in Smith v. Treasury of the United States, reporting is still voluntary at this time.   

A judge in the Eastern District of Texas ruled the CTA was unconstitutional on December 3, 2024, and issued a nationwide injunction against its enforcement. Upon appeal, a panel in the Fifth Circuit stayed the implementation of the injunction on December 23, 2024, which allowed the government to enforce the CTA requirements. However, on December 26, 2024, the Fifth Circuit reversed its own order and allowed the nationwide injunction to go back into effect. While Texas Top Cop Shop was before the Supreme Court, another court stayed the reporting rule effective date.

The government then appealed to the Supreme Court, requesting the nationwide injunction be stayed during the ongoing litigation. The case will now go back to the Fifth Circuit for a decision on the constitutional question. Despite the government’s request, the Court did not take up the question as to whether or not federal district courts have the authority to issue nationwide injunctions.  

The CTA has been a target of legal challenges since final regulations were published to implement it in September of 2023. Some courts have found the CTA to be an overreach of Congress’ constitutional authority. Other courts have upheld the requirements as falling under Congress’ power to regulate commerce. 

Our professionals are following the CTA very closely. Watch for further information.