On December 23, 2024, the Fifth Circuit granted the government's motion to stay the preliminary injunction that was issued by the U.S. District Court for the Eastern District of Texas in the Texas Top Shop case. The injunction had temporarily suspended reporting requirements under the Corporate Transparency Act (the "CTA"). As a result of the Fifth Circuit's order, the CTA's mandatory reporting is back in effect, subject to short extensions of certain reporting deadlines, as detailed below.
As noted in ourDecember 6, 2024 Legal Alert, a nationwide preliminary injunction was issued earlier this month that temporarily blocked the enforcement of the CTA and its implementing regulations and reporting deadlines. As a result of the injunction, "Reporting Companies" (i.e., companies that are obligated under the CTA to file beneficial ownership information reports with the U.S. Treasury Department's Financial Crimes Enforcement Network ("FinCEN")) were not required to comply with the CTA while such injunction was in effect.
The government quickly filed an emergency motion with the Fifth Circuit to stay the preliminary injunction issued by the U.S. District Court for the Eastern District of Texas. On December 23, 2024, the Fifth Circuit ruled on that motion, finding that "the government has made a strong showing that it is likely to succeed on the merits in defending the CTA's constitutionality," and granted an order in favor of the government, removing the preliminary injunction. As a result of the order, the CTA and its regulations remain enforceable, and compliance is mandatory.
Shortly after the Fifth Circuit's order was published, FinCEN issued an alert (availablehere) granting an extension to Reporting Companies for the following reporting deadlines:
| Creation or Registration Date | Revised Deadline |
| Prior to January 1, 2024 | January 13, 2025 |
| On or after September 4, 2024 with an original filing deadline between December 3, 2024 and December 23, 2024 | January 13, 2025 |
| On or after December 3, 2024 and on or before December 23, 2024 | Have an additional 21 days from their original filing deadline |
The Fifth Circuit's order didnotinclude a ruling on the constitutionality of the CTA, which remains the subject of litigation pending in various courts across the country. Until such a determination is made with general applicability, we expect the CTA's framework to remain in flux.
Nonetheless, as of the date of this alert, the CTA and its regulations are in effect and enforceable. Accordingly, Reporting Companies that have not already filed with FinCEN should review their filing obligations under the CTA. If a report is required, such report should be filed within the applicable deadlines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
