ARTICLE
7 January 2025

CTA Injunction Back In Place, At Least For Now, But Stay Tuned (Again)

PD
Phelps Dunbar LLP

Contributor

Phelps is a full-service Am Law 200 law firm, blending valuable traditions and progressive ideas to foster a culture of collaboration among our lawyers in Alabama, Florida, Louisiana, Mississippi, North Carolina, Tennessee, Texas, and London. The firm’s lawyers handle a broad range of sophisticated business needs regionally, nationally, and internationally.
In the latest change of course related to the Corporate Transparency Act (CTA), a preliminary nationwide injunction was reinstated on Dec. 26. Businesses currently do not need to comply with the CTA's reporting requirements.
United States Texas Corporate/Commercial Law

In the latest change of course related to the Corporate Transparency Act (CTA), a preliminary nationwide injunction was reinstated on Dec. 26. Businesses currently do not need to comply with the CTA's reporting requirements.

The Fifth Circuit Court of Appeals vacated its recent order lifting the nationwide preliminary injunction that blocked enforcement of the CTA and its implementing regulations. The court also stayed the compliance deadline for filing beneficial ownership information (BOI) reports entered in Texas Top Cop Shop, Inc. v. Garland. The nationwide preliminary injunction is back in effect, pending the Fifth Circuit's ruling on the government's expedited appeal.

As background (and to summarize the twists and turns that brought us here), on Dec. 3, Judge Mazzant of the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction that paused the CTA's enforcement. The order stayed the January 2025 compliance deadline for businesses to file BOI reports. The government moved to lift the injunction. On Dec. 23, a motions panel of the Fifth Circuit Court of Appeals agreed. Then, on Dec. 26, the Fifth Circuit Court of Appeals vacated the stay ordered by its motions panel, pending the expedited appeal and hearing on the merits. As of now, the nationwide preliminary injunction entered by the District Court is back in effect.

Phelps will continue monitoring developments related to the CTA and its implementing regulations. In the meantime, reporting companies should remain prepared to comply with the CTA's reporting requirements if the preliminary injunction is overturned or modified.

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