Another flurry of court activity has further muddied the Corporate Transparency Act (CTA) waters, leaving additional uncertainty about its enforceability.
You may recall that on December 26, 2024, the Fifth Circuit vacated its own order granting the Government’s motion to stay the district court’s preliminary injunction, leaving FinCEN unable to enforce the CTA and lifting any filing obligations. FinCEN has acknowledged the stay and is accepting voluntary beneficial ownership reports. Though the Fifth Circuit’s expedited briefing schedule provided Reporting Companies some sense of timing to analyze their reporting obligations (oral arguments are scheduled for late March), there is a possibility that Reporting Companies may have even less time than expected.
On December 31, 2024, the U.S. Department of Justice (DOJ) filed with the U.S. Supreme Court an emergency application to stay the injunction, asking the Court to either stay the injunction pending the Fifth Circuit’s review, or, in the alternative, to treat the application as a “petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.” Plaintiffs filed their opposition on January 10, 2025, DOJ filed their reply on January 13, 2025, and more than a dozen amicus curiae briefs were filed in support of both positions.
This obviously further complicates an already confusing turn of events. However, even if the Supreme Court grants the stay in the coming weeks, FinCEN would likely provide additional time to file should the law become effective. Again. Until then, the question is whether the Supreme Court will act before the Fifth Circuit hears the merits appeal.
McGuireWoods will continue to monitor developments and publish updates as the case proceeds.
