In a series of judicial ping-pong, the US Court of Appeals for the Fifth Circuit, on December 26, 2024, reinstated the nationwide injunction preventing enforcement of the Corporate Transparency Act (CTA) and halted beneficial ownership information (BOI) reporting requirements. No filings under the CTA are currently required by law.
This comes just days after the U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) annouced extensions of the filing deadlines for reporting companies.
The Fifth Circuit vacated the stay of the injunction three days after a motion panel issued an order granting the government's motion to stay the district court's preliminary injunction and reimposing the CTA. The panel reasoned that its decision would maintain the "constitutional status quo" pending the court's consideration of the parties' "weighty substantive arguments" and its decision on the merits regarding the CTA's constitutionality. The court also issued an expedited briefing schedule, with the parties submitting their briefs throughout February 2025 and oral argument set for March 25, 2025.
FinCEN also issued a new alert on December 27, 2024 explaining that reporting companies are not actively required to file BOI reports and will not be subject to liability while the Fifth Circuit's order remains in effect. FinCEN did note however that reporting companies may continue to voluntarily submit BOI reports.
Takeaways on the Corporate Transparency Act
The law on this issue is extremely fluid and fast changing, and reporting companies and affected individuals should continue to monitor legal developments affecting the CTA's reporting requirements.
Whether a reporting company voluntarily files or not, those affected should be prepared to promptly file if the injunction is lifted again.
While the injunction remains in place, reporting companies currently have no obligations to comply with the BOI reporting requirements.
Regardless of when the reporting company was formed or registered, the injunction applies to initial reports, corrections, updates, and other CTA-related filings.
The Fifth Circuit made clear that the constitutional problems presented by the CTA cannot be resolved quickly and the parties have a full opportunity to be heard.
The Fifth Circuit's imposition of an expedited briefing schedule defines a more clear path to the CTA's ultimate impact, and more clearly relieves reporting companies from fast approaching compliance obligations.
The impending Trump presidency and Republican control of both houses of Congress further complicates things, as elected officials take office before the case schedule occurs and it is not clear what steps Congress or the administration will take in enforcing the CTA.
Another monkey wrench is the impending decision in National Small Business United v. Yellen, the original CTA case out of Alabama, as well as the likelihood of an appeal to the US Supreme Court by the non-prevailing party in Texas Top Cop Shop.
For more information or questions in this area, please use our Contact form on the homepage.
Comments