As noted in our previous alert, the United States District Court for the Eastern District of Texas, in Texas Top Cop Shop, Inc., et al. v. Garland, et al., issued an injunction temporarily stopping enforcement of the Corporate Transparency Act (CTA). Following that injunction, the Financial Crimes Enforcement Network (FinCEN), the government agency in charge of enforcing the CTA, released a statement confirming FinCEN's willingness to abide by the injunction, but appealed the ruling.
On December 23, 2024, a motions panel for the Fifth Circuit Court of Appeals granted government's emergency motion for a stay of the injunction, meaning the injunction was no longer valid and millions of companies were then required to again comply with the CTA. Shortly after that decision, FinCEN issued an alert extending the deadline for most filers from January 1, 2025 to January 13, 2025.
However, late on December 26, 2024, the Fifth Circuit Court of Appeals vacated the portion of the motions panel's order granting government's stay of the district court's injunction. Said plainly, the Fifth Circuit Court of Appeals reinstated the nationwide injunction of the CTA. Like all of the previous orders in this legal back-and-forth, all of these orders are temporary while the substance of the lawsuit is heard on appeal, so this injunction remains subject to change at any time.
In light of the uncertainty of the appeals process and unknown timeframes for reporting if the CTA is ultimately held to be enforceable, we recommend reporting companies continue collecting the information needed to complete their beneficial ownership reports. While FinCEN could grant additional extensions like it did with the overturning of the initial injunction, there is no guarantee so filing deadlines could quickly approach should the injunction be overturned (again). At this time, FinCEN is still allowing reporting companies to file voluntarily – but this is not required.
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