Yesterday evening, on December 26, the U.S. Court of Appeals for the Fifth Circuit issued an unsigned order in Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, reversing its prior December 23 order lifting the preliminary injunction entered by the Eastern District of Texas barring the enforcement of the federal Corporate Transparency Act (CTA) and the Beneficial Ownership Information Reporting Requirements Final Rule (Final Reporting Rule). The state of play in light of the Fifth Circuit's most recent order is that enforcement of the CTA and the Final Reporting Rule is again halted and the updated compliance deadlines issued by FinCEN are no longer in effect. The court's opinion and order are available here.
In its order, the Fifth Circuit reasoned that reversing its prior order was appropriate to "preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments." The Fifth Circuit in its most recent order re-emphasized that the case would remain on an expedited briefing and argument schedule. By way of context, the most recent order was issued following the suing business entities' December 24 motion to the Fifth Circuit seeking an en banc rehearing and the Fifth Circuit's order calling for the government's response by December 31.
While the government may seek Supreme Court review of the Fifth Circuit's most recent order halting CTA enforcement, the timing and outcome of any such review is far from certain. As recent developments have shown, the status of the CTA and related deadlines remain in flux and can change rapidly. Accordingly, all reporting companies should continue to closely monitor CTA updates and assess whether to adjust their timelines for compiling the necessary reporting materials. Developments in other pending federal litigation challenging the constitutionality of the CTA (including National Small Business United v. Yellen, No. 24-10736 (11th Cir.)) may also impact the applicability of the court's order.
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.
