The Bottom Line
- Reversing course from its ruling on December 23, the Fifth Circuit Court of Appeals again put on hold the enforcement of the CTA.
- With the nationwide preliminary injunction back in place (for now), reporting companies are not required to file BOI reports with FinCEN.
- With the ongoing shifts in court rulings, reporting companies should proactively collect and maintain their beneficial ownership information to stay prepared in the event that filing requirements are, again, reinstated on short notice.
Timeline: Prior CTA Developments
- December 3, 2024: The United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction halting the enforceability of the Corporate Transparency Act (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.
New Development: Fifth Circuit Reversal
On 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.
On Hold: Requirement to File Beneficial Ownership Information Report
As a result of the aforementioned procedural actions, the nationwide injunction has been reinstated. Accordingly, FinCEN updated the BOI webpage to indicate that reporting companies are again no longer required to file beneficial ownership information reports and will not be subject to liability if they do not do so while the injunction remains in place.
Recommendation: Stay Prepared
With the pending review by the Fifth Circuit Court of Appeals, additional developments are ahead. At this time, however, reporting companies should continue to collect and maintain their beneficial ownership information (BOI) reports in the event the CTA, yet again, goes back into effect on a short timeline.
Davis+Gilbert continues to monitor developments on all fronts as this case (and others) work their way through the courts.