In yet another development surrounding the Corporate Transparency Act (CTA), on December 26, 2024, the United States Court of Appeals for the Fifth Circuit reinstated the nationwide preliminary injunction enjoining the enforcement of the CTA. As a result, reporting companies are not required to file beneficial ownership information reports with the Financial Enforcement Network (FinCEN) while the preliminary injunction remains in place.
The preliminary injunction had been issued earlier this month by the United States District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. v Garland. The government appealed the district court's order to the Fifth Circuit and filed an emergency motion for a stay pending that appeal. On December 23, 2024, a motions panel of the Fifth Circuit in a reasoned order granted the government's motion and stayed the injunction. However, only three days later, the Fifth Circuit vacated the stay, observing only that it was necessary to preserve the status quo.
The Fifth Circuit has scheduled a hearing on the government's appeal for March 25, 2024.
Reporting companies may still voluntarily file their beneficial ownership reports with FinCEN and should continue to prepare for filing in the event the injunction is lifted.
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