On December 26, 2024, in Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5224138 (5th Cir. Dec. 26, 2024), a merits panel of the United States Court of Appeals for the Fifth Circuit issued an order vacating the Court’s own stay of the preliminary injunction enjoining enforcement of the Corporate Transparency Act (“CTA”), that was originally entered by the United States District Court for the Eastern District of Texas on December 3, 2024, No. 4:24-CV-478, 2024 WL 5049220 (E.D. Tex. Dec 5, 2024).
A Timeline of Events:
- December 3, 2024 – The District Court orders a nationwide preliminary injunction on enforcement of the CTA.
- December 5, 2024 – The Government appeals the District Court’s ruling to the Fifth Circuit.
- December 6, 2024 – The U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issues a statement making filing of beneficial ownership information reports (“BOIRs”) voluntary.
- December 23, 2024 – A motions panel of the Fifth Circuit grants the Government’s emergency motion for a stay pending appeal and FinCEN issues a statement requiring filing of BOIRs again with extended deadlines.
- December 26, 2024 – A merits panel of the Fifth Circuit vacates its own stay, thereby enjoining enforcement of the CTA.
- December 27, 2024 – FinCEN issues a statement again making filing of BOIRs voluntary.
- December 31, 2024 – FinCEN files an application for a stay of the December 3, 2024 injunction with the Supreme Court of the United States.
This most recent order from the Fifth Circuit has effectively paused the requirement to file BOIRs under the CTA once again. In its most recent statement, FinCEN confirmed that “[i]n light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
Although reporting requirements are not currently being enforced, we note that this litigation is ongoing, and if the Supreme Court decides to grant FinCEN’s December 31, 2024 application, reporting companies could once again be required to file. Given the high degree of unpredictability, reporting companies and others affected by the CTA should continue to monitor the situation closely and be prepared to file BOIRs with FinCEN in the event that enforcement is again resumed. If enforcement is resumed, the current reporting deadline for most reporting companies will be January 13, 2025, and while FinCEN may again adjust deadlines, this outcome is not assured.
For more information on the CTA and reporting requirements generally, please reference the linked Client Alert, dated November 24, 2024.