Capping off a tumultuous month for the Corporate Transparency Act (CTA), late on December 26, 2024, the merits panel of the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit) reinstated the nationwide preliminary injunction blocking the Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA. Only three days prior, the motions panel of the Fifth Circuit had reimposed filing obligations under the CTA. As a result, reporting companies under the CTA are, once again, not required to file their beneficial ownership information with FinCEN while the preliminary injunction remains in effect.
In its December 26th ruling, the merits panel explained that vacating the stay would “preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” The Fifth Circuit issued an expedited briefing schedule, with briefing to be completed by February 28, 2025, and oral arguments following on March 25, 2025.
In a statement posted to its website on December 27, 2024, FinCEN has confirmed that reporting companies are “not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”1
As a reminder, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued the preliminary injunction, which also stayed the January 1, 2025, compliance deadline.2 On December 23, 2024, the Fifth Circuit motions panel granted the U.S. government’s request for an emergency stay of the injunction, and, in response, FinCEN extended the deadlines for reporting companies, including a new reporting deadline of January 13, 2025 (instead of January 1, 2025), for reporting companies created or registered prior to January 1, 2024. See Sidley’s updates on December 5, 2024, December 10, 2024, and December 26, 2024, for more information.
The status of the CTA remains uncertain, especially given the impending changes in both Congress and the executive branch in 2025, and this month has shown that the situation can change in a matter of days. As such, although the reporting deadlines are currently on pause, reporting companies may wish to continue to review their obligations under the CTA, including identifying beneficial owners and gathering information that would be required for any beneficial ownership information report filings, to be prepared for any eventuality, including additional superseding orders by the courts. Additionally, reporting companies should continue to monitor for additional updates or guidance from FinCEN as a result of the ongoing litigation.
1 See FinCEN, Alert [December 27, 2024]: Impact of Ongoing Litigation – Deadline Stay – Voluntary Submission Only.
2 Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Texas Dec. 3, 2024).
