Fifth Circuit Stays Texas District Court Ruling Suspending Enforcement of Corporate Transparency Act

Following a ruling in the US District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. v. Garland, a nationwide preliminary injunction was previously put in place suspending the enforcement of the Corporate Transparency Act (“CTA”) and beneficial ownership information (“BOI”) reporting requirements. 2024 WL 4953814 (E.D. Tex. Dec. 3, 2024). On December 23, 2024, the US Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction enjoining the CTA, pending the outcome of the Department of the Treasury’s ongoing appeal of the Texas district court’s order. As a result, companies should proceed with appropriately filing their BOI reports according to the extended deadlines outlined below.

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 now recommend that reporting companies proceed with filing in a timely manner. As a result of the stay issued by the Fifth Circuit, FinCEN has issued the following extended deadlines to previous reporting guidelines:

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial BOI reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
• Reporting companies created or registered in the US on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial BOI reports with FinCEN.
• Reporting companies created or registered in the US on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial BOI reports with FinCEN.
• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. Such companies should abide by whichever deadline falls later.
• Reporting companies that are created or registered in the US on or after January 1, 2025 have 30 days to file their initial BOI reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

How to Proceed in Light of the Fifth Circuit Stay

Following the extended deadlines FinCEN issued above, we recommend that reporting companies gather the requisite materials and submit new filings in a timely manner. 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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We will continue to monitor developments in this area and encourage you to subscribe to be kept informed of latest developments. Please contact the authors or your usual Herbert Smith Freehills contacts for more information.