On December 26, 2024, the Fifth Circuit of the U.S. Court of Appeals issued an order that reinstates the U.S. District Court’s preliminary injunction suspending the enforcement of the Corporate Transparency Act (CTA) nationwide (vacating part of an order the same Court issued earlier that week). In its order, the Fifth Circuit stated that it was reinstating the lower Court’s preliminary injunction “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments …”
As explained in more detail here, the CTA requires new and existing companies to disclose to the Financial Crimes Enforcement Network (FinCEN) of the Treasury Department certain beneficial ownership information (BOI) about the individuals who ultimately own or control those reporting companies.
In response to the most recent Court order, FinCEN issued the following alert on its Beneficial Ownership Information webpage: “[i]n light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
It is important to note that the enforcement of the CTA could resume at any time if the Court’s recent order is modified or the original order is overturned on appeal as that order is not a final decision.
We will continue monitoring developments in this area and provide our clients with updates but we also advise those clients yet to file to monitor the developments on their own given the approaching January 1, 2025 compliance deadline.
