Corporate Transparency Act Update: Injunction Reinstated, Compliance Still Voluntary Pending Appeal

A federal injunction halting enforcement of the Corporate Transparency Act (CTA) was removed and then reinstated by a federal appeals Court as of December 26, 2024. As such, compliance is still voluntary pending a ruling on the appeal.

Background on the CTA

The CTA mandates that certain business entities report beneficial ownership information (BOI) to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). This requirement aims to prevent the misuse of anonymous shell companies for activities such as money laundering and tax evasion.

Recent Judicial Developments

• December 3, 2024, Preliminary CTA Injunction: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, halting the enforcement of the CTA and its reporting requirements. See?Court Temporarily Blocks CTA, Compliance Voluntary Pending Appeal
• December 23, 2024, Preliminary CTA Injunction Lifted: U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) granted a stay of the District Court’s preliminary injunction, effectively reinstating the CTA’s enforcement of the ownership reporting requirements. In response, FinCEN extended the reporting deadline to January 13, 2025, acknowledging the need for additional compliance time.
• December 26, 2024, Preliminary CTA Injunction Reinstated Pending Appeal: The Fifth Circuit vacated its previous stay, reinstating the nationwide preliminary injunction. This action suspends the CTA’s enforcement and reporting deadlines until the court can fully assess the substantive arguments concerning the act’s constitutionality.
• Pending Appeal Spring 2025: the Fifth Circuit issued an expedited briefing schedule with a hearing Scheduled on March 25, 2025. Any court ruling as to the constitutionality and enforcement of CTA will likely come after that date.

Current Status & Recommendations for Businesses

As of now, entities are not required to file BOI reports with FinCEN. However, voluntary submissions are permitted.

CLICK HERE for full article with Recommendations and links to FinCEN website to keep updated on CTA compliance requirements.