Client Alerts  - Corporate and Business Law Dec 30, 2024

Corporate Transparency Act Roller Coaster – CTA Enforcement Enjoined Again

Pen on stop of a stack of papers

Fifth Circuit Vacates December 23, 2024 Order

On December 3, 2024, in the case of Texas Top Cop Shop, Inc. v. Garland, a Texas federal court issued a nationwide preliminary injunction enjoining enforcement of the Corporate Transparency Act (31 U.S.C. § 5336) (CTA) and its reporting requirements (as referenced in our December 10, 2024 client alert).

Thereafter, on December 23, 2024, a motions panel of the U.S. Court of Appeals for the Fifth Circuit issued an order staying the Texas district court’s injunction and thus, at such time, the reporting requirements for entities subject to the CTA were reinstated. In response to the order, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published an alert extending the filing deadline for most reporting companies to January 13, 2025. See here for our previous client alert on the extended deadline.

On December 26, 2024, the Fifth Circuit essentially reversed its position and reinstated the preliminary injunction. In an order issued by a merits panel of the court, the Fifth Circuit vacated the December 23, 2024 stay. As a result, the nationwide preliminary injunction enjoining enforcement of the CTA and its reporting requirements is back in effect.

At this time, reporting companies are not required to file beneficial ownership information reports (BOIR) with FinCEN. However, as noted in our earlier client alerts, voluntary BOIR filings with FinCEN continue to be accepted, notwithstanding the effectiveness of the preliminary injunction. Unless reporting companies have made required filings, reporting companies should continue to closely monitor developments to ensure timely action in the event the preliminary injunction is again stayed or lifted.

Additional Assistance

For further assistance, please contact a member of our Corporate and Business Law Practice Team or the Phillips Lytle attorney with whom you have a relationship.

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