Corporate Transparency Act on Hold (Again), Pending Further Litigation

The Corporate Transparency Act (CTA) is once again enjoined nationwide, and the CTA’s requirements to file reports of beneficial ownership are again suspended.

On December 3, 2024, a federal district court in Texas enjoined the CTA nationwide. This suspended the CTA’s reporting requirements, including the January 1, 2025 deadline for companies formed or registered prior to 2024 to file their beneficial ownership information reports. On December 23, 2024, the Fifth Circuit stayed the lower court’s nationwide preliminary injunction of the CTA, effectively reimposing the CTA’s requirements and their associated deadlines.  The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) then extended the January 1, 2025 reporting deadline to January 13, 2025 for reporting companies formed or registered before 2024.  But on December 26, 2024, a different panel of the Fifth Circuit responsible for resolving the expedited appeal of the preliminary injunction issued an order vacating the stay. That means the nationwide preliminary injunction is back in effect and reporting companies are not currently required to file beneficial ownership reports, including by the January 13, 2025 deadline.

FinCEN confirmed the latest developments in a statement on December 27, 2024, noting that reporting companies are not subject to liability if they fail to file beneficial ownership information with FinCEN while the order remains in force.  It also noted that reporting companies may continue to voluntarily submit beneficial ownership information reports.

The new Fifth Circuit panel has scheduled an oral argument for March 25, 2025 to resolve the appeal of the district court’s preliminary injunction.  In the meantime, the government must decide whether to ask the U.S. Supreme Court to intervene and stay the preliminary injunction, or limit its scope, pending appeal, or continue to litigate the appeal, leaving the nationwide injunction against the CTA in place until at least the end of March.  

Given the uncertainty about whether and when CTA reporting will be required, it would be prudent for reporting companies that choose not to file while the CTA remains enjoined to conduct the necessary analysis and information collection so they can file on short notice if necessary.