The Bottom Line
- A decision by a judge in the United States District Court for the Eastern District of Texas to stay a previously granted preliminary injunction reinstated beneficial ownership reporting requirements under the CTA with a deadline of March 21, 2025.
- Previously, the Supreme Court stayed one injunction that prohibited the government from enforcing the CTA.
- Businesses need to stay informed about the ongoing litigation and be ready for possible changes that could affect their compliance obligations under the CTA.
In a significant development for the Corporate Transparency Act (CTA), a judge in the United States District Court for the Eastern District of Texas has stayed the only remaining nationwide injunction, allowing the government to enforce the CTA – meaning that the CTA’s reporting requirements are again in effect.
Timeline: Prior CTA Developments
- December 3, 2024: Judge Amos Mazzant of the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction halting the enforceability of the CTA and its implementing regulations.
- December 23, 2024: A motions panel of the United States Court of Appeals for the Fifth Circuit stayed the District Court’s injunction, which effectively reinstated the beneficial ownership reporting requirement under the CTA. The same day, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) extended the applicable filing deadlines.
- December 26, 2024: The Fifth Circuit vacated the motion panel’s order staying the injunction pending its consideration of the constitutionality of the CTA. In issuing its order, the Fifth Circuit noted its desire to maintain the “constitutional status quo” while the proceedings advance. In connection with the ruling, the court issued an expedited schedule for a hearing on the merits, but oral arguments are not scheduled until the end of March 2025.
- January 7, 2025: Judge Jeremy Kernodle of the United States District Court for the Eastern District of Texas heard a second case on the constitutionality of the CTA and issued a separate nationwide preliminary injunction, halting the enforceability of the CTA on different grounds than those relied on by Judge Mazzant.
- January 23, 2025: The Supreme Court stayed the injunction issued by Judge Mazzant pending the disposition of the applicable appeal by the Fifth Circuit. With this action, absent the second injunction, the government would again be permitted to enforce the CTA (and require reporting companies to file beneficial ownership information reports (BOI Reports)). The Supreme Court did not address the injunction against the CTA’s reporting rule that was issued by Judge Kernodle.
New Development: Second Nationwide Injunction Stayed
On February 18, 2025, Judge Kernodle stayed the preliminary injunction he had previously issued against the enforcement of the CTA. This stay allows the Department of the Treasury to enforce the CTA. FinCEN has set a deadline of 30 calendar days from February 19, 2025, i.e., March 21, 2025, for reporting companies to comply. FinCEN has also announced that during this 30-day period it will assess its options to “further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks.” Reporting companies previously subject to a reporting deadline later than March 21, 2025, due to disaster relief extensions, for example, should still comply with those deadlines.
Back in Effect: Requirement to File Beneficial Ownership Information Report
As a result of the procedural actions described above, there are no remaining nationwide injunctions in effect against the CTA. Accordingly, FinCEN updated the BOI webpage to reflect the status of the two ongoing lawsuits and clarify that reporting companies must file BOI Reports.
Recommendation: Stay Prepared
With the pending review of Judge Mazzant’s ruling by the Fifth Circuit Court of Appeals scheduled for March 2025, additional developments are ahead. The Fifth Circuit and/or Supreme Court may also review the stay issued by Judge Kernodle. At this time, reporting companies should continue to collect and maintain their beneficial ownership information and prepare to file in advance of the March 21, 2025 deadline, with the understanding that further legal and/or FinCEN action may cause additional delay.
Davis+Gilbert continues to monitor developments on all fronts as these cases (and others) work their way through the courts.