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 rules (as referenced in our prior client alert).
On December 13, 2024, an emergency motion was filed by the U.S. Department of Justice (DOJ) with the U.S. Court of Appeals for the Fifth Circuit to stay the nationwide preliminary injunction. The DOJ requested a ruling from the Fifth Circuit no later than December 27, 2024. In addition, thereafter, the Fifth Circuit accelerated the briefing schedule related to such matter and, as a result, the Fifth Circuit is positioned to make a decision on the motion quickly.
A decision by the Fifth Circuit may include a complete or partial stay of the preliminary injunction or a denial of the DOJ’s request for a stay of the preliminary injunction. Therefore, it is possible that the Fifth Circuit’s decision may result in the reinstatement of the January 1, 2025 reporting deadline for reporting companies formed prior to January 1, 2024.
Given the new developments, the continuing uncertainty regarding changes related to the preliminary injunction, and unpredictable timing of a court decision relating thereto, companies that have not yet filed beneficial ownership information reports (BOIR) should continue to prepare for compliance with the CTA requirements by the January 1, 2025, deadline in the CTA. As noted in our earlier client alert, BOIR filings with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) continue to be accepted, notwithstanding the preliminary injunction.
Unless reporting companies have made required filings, reporting companies should continue to closely monitor developments to ensure timely action is taken if the stay is lifted or the preliminary injunction is revised.
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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