The Corporate Transparency Act’s Implementation Is Halted Yet Again

With the deadline for year-end filings under the Corporate Transparency Act (CTA) approaching, the Fifth Circuit Court of Appeals issued an Order on December 26, 2024, vacating the December 23, 2024 Order granting the government’s motion to stay the District Court’s preliminary injunction, enjoining the CTA enforcement. This means that the nationwide injunction on the CTA is in effect, meaning Reporting Companies are not required to file beneficial owner reports. The Fifth Circuit cited a desire “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”

As a brief overview, on December 3, 2024, Judge Amos L. Mazzant III of the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, questioning Congress’s authority in enacting the law. The government appealed, and on December 23, 2024, the Fifth Circuit panel granted a temporary stay. However, this stay was vacated on December 26, 2024, preserving the injunction while the appeal proceeds.

Following this ruling, on December 27, 2024, the Financial Crimes Enforcement Network (FinCEN) issued the following statement on its 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.”

Even though the CTA enforcement is currently on hold, Reporting Companies should stay vigilant for any updates and be ready to file if the injunction is lifted.