What happened now?
On December 26, 2024, and only three days after lifting the nationwide injunction pending appeal, the merits panel of the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide injunction staying enforcement of the Corporate Transparency Act (“CTA”) and its reporting rules and regulations. The Fifth Circuit panel decided to continue the nationwide injunction to preserve the constitutional status quo while it examines the parties’ substantive arguments and the merits of the underlying appeal. The Fifth Circuit is reviewing the appeal on an expedited basis, and oral arguments are currently scheduled for March 25, 2025.
Other cases challenging the constitutionality of the CTA also remain pending; whether any of these cases will ultimately hold that the CTA is unenforceable is uncertain.
What does this mean?
This injunction is not final and the future of the CTA remains uncertain. Pursuant to an alert posted on U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) website, reporting companies are not currently required to file beneficial ownership information and are not subject to liability if they fail to do so while this order remains in force. Reporting companies may continue to voluntarily submit beneficial ownership information reports, and reporting companies should carefully monitor any further developments.
What’s next?
Given the uncertainty surrounding the law and the status of the injunction, reporting companies that have not yet filed should continue compliance efforts and be prepared to act quickly to meet deadlines should the injunction be overturned, including preparing necessary BOI report information and documentation for filing. This advice is based only on the law as it stands right now and takes into account no further developments.
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