Hold Your Horses, 5th Circuit… Let’s Figure Out What’s Happening with the Corporate Transparency Act
As of December 26, 2024, entities are not required to file beneficial ownership information reports (BOI reports) with FinCen, and the nationwide preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) is back!
The past week has been confusing and chaotic as the injunction was stayed and then reinstated by the 5th Circuit within a matter of days. In an attempt to explain, the December timeline is below:
- Tuesday, December 3, 2024 – The U.S. District Court for the Eastern District of Texas (Texas District Court) granted a nationwide preliminary injunction suspending enforcement of the CTA, relieving entities of the obligation to file BOI reports. FinCen confirmed that it would honor this injunction and that filings would be voluntary.
- Monday, December 23, 2024 – The motions panel of the U.S. Court of Appeals for the Fifth Circuit (5th Circuit) issued an order staying the nationwide preliminary injunction that was previously issued by the Texas District Court. The result of the 5th Circuit stay was that the injunction was no longer in effect and meant that millions of business were again required to comply with CTA no later than January 1, 2025 (for entities formed before January 1, 2024).
- Late on Monday, December 23, 2024 – Shortly after the 5th Circuit ruling, FinCen extended deadlines for filings to January 13, 2025 (for entities formed before January 1, 2024) and also extended filings for new entities in a like manner. This provided temporary relief for filers.
- Thursday, December 26, 2024 – The merits panel of the 5th Circuit vacated the stay issued a few days prior on December 23, meaning that the nationwide preliminary injunction of Texas District Court was reinstated, and entities are not required to comply with CTA. Again, this recent order is subject to any additional court or Congressional action.
As the 5th Circuit case progresses, we recommend monitoring the status and gathering necessary information for BOI reports (including any updates to information in previously filed BOI reports) in the event the injunction is lifted again or the decision reversed or vacated. It is unknown how quickly BOI reports will need to be filed in the future if compliance obligations are reinstated under CTA. You may also voluntarily file your BOI reports at any time.
For further background information on the CTA please see our previously published articles – The Corporate Transparency Act – What You Need to Know Now, Your Health Care Organization Could Be Subject to the Corporate Transparency Act (CTA), What is Happening with the Corporate Transparency ACT (CTA)?, and Well, That was Quick – The Corporate Transparency Act is Back: Appellate Court Lifts Nationwide Injunction.
The contents of this Client Alert are for informational purposes only and do not constitute legal advice. If you have any questions or want to engage our Firm to provide CTA compliance services, please contact a Baird Holm attorney.
