Our roller coaster ride with the Corporate Transparency Act (CTA) continues. On Dec. 26, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated its Dec. 23 order staying the prior injunction in Texas Top Cop Shop, Inc. v. Garland. As a result, the lower court’s injunction is back in effect, and CTA reporting obligations are again suspended.
Companies that have already filed their beneficial ownership reports require no further action. Companies that have not yet filed beneficial ownership reports may do so voluntarily, but there is no requirement to file while the Texas district court’s injunction remains in place.
What’s next for the CTA?
Though the CTA cannot be enforced for now, we’re still not out of the woods. The Fifth Circuit determined that the injunction should remain in place while the appeal is pending “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments[.]” The Fifth Circuit has scheduled oral argument for March 25, 2025. The court will likely issue its decision on the merits of the appeal sometime in the second quarter of 2025.
We do not expect the Fifth Circuit to reverse course again, but it could do so if the government asks the full Fifth Circuit to reconsider the most recent order. The U.S. Supreme Court could also take action to stay the injunction.
If the full Fifth Circuit or the Supreme Court were to stay the injunction, CTA filing obligations and enforcement would come back to life. When that last occurred on Dec. 23, the U.S. Financial Crimes Enforcement Network (FinCEN) stepped in to push CTA filing deadlines back to Jan. 13, 2025, for most reporting companies. But it did not provide relief to reporting companies whose filing deadline had already passed before the Texas court issued its injunction (specifically, reporting companies formed between Jan. 1, 2024 and Sept. 3, 2024, whose reporting deadline was 90 days after the date of formation).
What do I do now?
As we’ve seen over the last several days, the CTA landscape can shift rapidly and without warning. For now, filing obligations remain suspended. Clients who have not yet filed beneficial ownership reports may choose to hold on submitting their reports while we await further clarity from the courts. In the meantime, we strongly recommend that clients continue the work needed to prepare BOI reports and be ready to file. Clients should complete the information gathering and ownership analysis needed to have BOI reports prepared and ready to file in case filing is again required. For more details on the information you’ll need to report, please see our prior eAlert.
