Update: On Dec. 26, 2024, a different panel on the Fifth Circuit Court of Appeals vacated the emergency stay discussed in the alert below. As a result, the nationwide CTA injunction is back in effect, meaning that reporting companies currently have no obligation to comply with the CTA, unless and until the injunction is stayed, narrowed or overturned on further appeal.
Key Takeaways
- On Dec. 23, 2024, the Fifth Circuit Court of Appeals granted the government's motion for an immediate stay of the nationwide preliminary injunction issued by a federal district court in Texas that temporarily halted the implementation of the Corporate Transparency Act (CTA).
- Following the decision, the Financial Crimes Enforcement Network (FinCEN) issued a public statement confirming that it would extend the initial filing deadline for preexisting entities from Jan. 1, 2025, to Jan. 13, 2025.
- As a result, preexisting entities must file their initial beneficial ownership information report (BOIR) on or prior to Jan. 13, 2025, unless and until the plaintiffs win emergency relief from the Fifth Circuit or the Supreme Court of the United States.
- There has been no statutory extension of the initial reporting deadline. The original draft of the continuing resolution (CR) that was needed to avoid a government shutdown last week had included a provision to amend the CTA by extending the reporting deadline for preexisting companies to Jan. 1, 2026. However, that amendment was removed in the final version of the funding bill that was eventually passed.
Fifth Circuit Grants Immediate Stay of Nationwide Preliminary Injunction, FinCEN Extends Deadline to Jan. 13, 2025
On Dec. 23, 2024, the Fifth Circuit Court of Appeals granted the government's motion for an immediate stay pending appeal of the preliminary injunction issued on Dec. 3, 2024, by a federal district court in Texas. The injunction had applied on a nationwide basis, temporarily halting the implementation of the CTA just weeks prior to the original initial filing deadline of Jan. 1, 2025, for preexisting entities (i.e., entities formed prior to 2024).
As a result of the appellate court's decision, the original Jan. 1, 2025, deadline was back in effect. However, FinCEN later issued a public statement confirming that it would toll the reporting deadlines to give reporting companies additional time to comply with the CTA in light of the period in which the preliminary injunction had been in effect.
The extended reporting deadlines are as follows:
| Date of Formation | Original Deadline | New Deadline |
| Prior to 2024 | Jan. 1, 2025 | Jan. 13, 2025 |
| Sept. 4, 2024 – Sept. 24, 2024 | Dec. 3, 2024 – Dec. 23, 2025 | Jan. 13, 2025 |
| Dec. 3, 2024 – Dec. 23, 2024 | 90 days after formation | 21 additional days after their original deadline |
These new deadlines will remain in effect unless and until the plaintiffs win emergency relief from the Fifth Circuit or the Supreme Court.
In granting the stay, the Fifth Circuit panel issuing the decision held that (i) the government made a strong showing that it is likely to succeed on the merits; (ii) the government would be irreparably harmed absent a stay; (iii) businesses would not be substantially injured by the stay; and (iv) public interest favored the stay.
The ruling was issued despite an unusual showing of amicus support for an appellate court case. Nearly 30 amicus briefs were filed by trade associations or similar small business organizations in support of keeping the injunction in place. In addition, 25 total states filed an amicus brief either jointly or individually in support of the plaintiffs.
The plaintiffs intend to seek emergency relief from the Fifth Circuit in an en banc rehearing and, if necessary, the Supreme Court.
No Statutory Relief from the CTA
On Dec. 17, 2024, Congress had proposed legislation that would have amended the CTA by extending the initial reporting deadline for preexisting entities to Jan. 1, 2026. The amendment was included as part of the draft CR that needed to become law to avoid a government shutdown scheduled to take effect at midnight on Dec. 20, 2024. As discussed in our prior alert, Congress had been making a serious effort to hit pause on the CTA, and the CR represented the last opportunity to do so prior to the Jan. 1, 2025, deadline.
However, that original draft of the CR was scrapped over disagreements relating to various spending provisions. The version of the CR that was eventually passed was much slimmer and removed many of the non-spending provisions, including the CTA amendment.
Some congressional staff members had indicated that addressing the CTA would be a priority when the next congressional session begins in January. However, that may be too little too late assuming the Jan. 1, 2025, deadline remains in effect.
We will continue to provide updates regarding further material developments as they arise.
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.
