Corporate Transparency Act Blocked Again Days After Fifth Circuit Motions Panel Stays Texas District Court Ruling Suspending Enforcement

In a rapid turn of events, on December 26, 2024, a separate Fifth Circuit panel reinstated the nationwide injunction on enforcement of the Corporate Transparency Act (“CTA”), which was previously vacated by a Fifth Circuit motions panel on December 23, 2024. In that now vacated order, the Fifth Circuit motions panel granted a stay of the US District Court for the Eastern District of Texas’s ruling in Texas Top Cop Shop, Inc. v. Garland, which issued a preliminary injunction enjoining the CTA and beneficial ownership information (“BOI”) reporting requirements, pending the outcome of the Department of the Treasury’s ongoing appeal of the Texas district court’s order. 2024 WL 4953814 (E.D. Tex. Dec. 3, 2024).

Following the recent December 26^th Fifth Circuit ruling vacating the previous stay, reporting companies are not currently required to file beneficial ownership reports with FinCEN and are not subject to liability if they fail to do so while the preliminary injunction remains in place. However, reporting companies may continue to voluntarily submit beneficial ownership reports through the BOI portal. Reporting companies that have already filed their reports need not take any action at this time. We note that oral arguments for the Fifth Circuit’s merits decisions are scheduled for March 25, 2025, and that there are numerous pending litigations challenging the constitutionality of the CTA at this time.

How to Proceed in Light of this Reinstatement

We previously reported on this ruling on December 10, 2024, generally recommending that reporting companies gather the requisite materials to be prepared to submit new filings, but that they pause on submitting such filings and closely monitor developments. Following the most recent FinCEN alert, we continue to recommend that reporting companies that have not filed, and that do not wish to file voluntarily, be prepared to file on short notice. However, considering that FinCEN is accepting BOI reports on a voluntary basis at this time, it may be in a reporting companies interest to proceed with filing depending on specific circumstances.

We are available to assist with filing such a report, and further information to file a report, such as the official form and relevant exemptions, can be found on the FinCEN FAQ.

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