Corporate Transparency Act Enforcement Injunction Reinstated by Fifth Circuit

On December 26, 2024, the United States Court of Appeals for the Fifth Circuit (the “Fifth Circuit”) reinstated the preliminary injunction previously granted by the United States District Court for the Eastern District of Texas (the “District Court”) in Texas Top Cop Shop, Inc. v. Garland, which temporarily enjoined Corporate Transparency Act (“CTA”) enforcement nationwide. The reinstatement of the preliminary injunction is a reversal of the Fifth Circuit motion panel’s ruling on December 23, 2024, granting the government’s motion to stay the District Court’s preliminary injunction, pending expedited appeal. As a result, CTA enforcement is once again enjoined nationally, including the previously announced reporting deadline of January 13, 2025, for reporting companies that existed prior to January 1, 2024. On December 27, 2024, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) released a statement acknowledging the Fifth Circuit’s new order and noting that reporting companies are not currently required to file beneficial ownership information with FinCEN.

In light of the CTA enforcement injunction being reinstated, we remind reporting companies that this is only a preliminary injunction and a final ruling on the CTA’s constitutionality has not occurred. We recommend reporting companies prepare for CTA compliance and be ready to submit their respective beneficial ownership report in the event the preliminary injunction is lifted again or the CTA is deemed constitutional by an appellate court.

Hodgson Russ will continue monitoring CTA developments. [1]

Disclaimer:

This client alert is a form of attorney advertising. Hodgson Russ LLP provides this information as a service to its clients and other readers for educational purposes only. Nothing in this client alert should be construed as, or relied upon, as legal advice or as creating a lawyer-client relationship.

[1] For more information, please see our previous client alerts, “Reporting Requirements Under the Corporate Transparency Act: How Does it Affect My Company?”, “Corporate Transparency Act: FinCEN Updates and Guidance Ahead of January 1, 2024 Effective Date,” “Corporate Transparency Act Enforcement Enjoined by Preliminary Injunction,” and “Corporate Transparency Act Enforcement Injunction Lifted by Fifth Circuit; Reporting Deadline Extended to January 13, 2025."