Enforcement of the Corporate Transparency Act (CTA) was paused again on Thursday—halting an upcoming deadline for companies to submit Beneficial Ownership Information Reports (BOIRs) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN)—when a merits panel of the U.S. Court of Appeals for the Fifth Circuit reinstated a federal district judge’s preliminary injunction.
On December 23, a Fifth Circuit motions panel stayed U.S. District Court Judge Amos L. Mazzant’s December 3 preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al. (E.D. Tex., No. 4:24-cv-00478). As a result, the Corporate Transparency Act was revived, requiring companies to submit beneficial ownership information to FinCEN. To lessen the burden, FinCEN announced it would extended certain upcoming deadlines for non-exempt entities to file their initial BOIRs.
On December 26, 2024, a separate Fifth Circuit merits panel vacated the court’s December 23 stay, reinstating Judge Mazzant’s preliminary injunction. With the preliminary injunction resurrected, enforcement of the CTA is enjoined nationwide and the January 1, 2025, compliance deadline for reporting companies formed before January 1, 2024, (which FinCEN had extended until January 13, 2025) is stayed.
FinCEN has confirmed reporting companies are no longer required to file their BOIRs and will not be subject to liability for failing to do so while the preliminary injunction is in force. Companies are still able to voluntarily submit BOIRs should they choose to do so.
While the CTA’s ultimate enforceability remains uncertain, we encourage you to consult experienced counsel with questions you may have, including preparations you should consider now to be ready to comply with the CTA should compliance requirements be reinstated. As we’ve seen from FinCEN’s extensions last week, the government may only grant a short extension for companies to submit their BOIRS on time.
Fenwick will continue to monitor this and other cases pending throughout the country.
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