As PSRB previously reported earlier this month, on December 3, 2024, a federal court sitting in the Eastern District of Texas held that the Corporate Transparency Act (CTA) was unconstitutional and issued a nationwide preliminary injunction suspending the enforcement of the CTA for all reporting companies.

There has been a lot of activity over the past several weeks regarding the CTA, including the government’s Financial Crimes Enforcement Network (FinCEN) appeal to the Fifth Circuit Court of Appeals on December 9, 2024. FinCEN filed an emergency motion to stay the order and preliminary injunction pending appeal, which if granted could mean that the CTA’s initial reporting deadline of January 1, 2025 would be reinstated.

On December 23, 2024, a divided Fifth Circuit panel granted FinCEN’s stay request. The appellate court found that FinCEN made a strong showing that it is likely to succeed in defending the CTA’s constitutionality. It also found that a “last-minute” injunction of the CTA inflicts irreparable harm. FinCEN subsequently announced it would extend the deadline for many reporting companies until mid-January.

Then, on December 24, 2024, the businesses filed an emergency petition for rehearing by the entire Fifth Circuit and asked the court to vacate its prior order and deny FinCEN’s stay request. Two hours later, the Fifth Circuit ordered FinCEN to respond by December 31, 2024.

However, late in the evening on December 26, 2024, the Fifth Circuit reconsidered its decision, prior to receiving FinCEN’s response. The court reinstated the district court’s nationwide preliminary injunction suspending the enforcement of the CTA for all reporting companies. It did so “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”

The Fifth Circuit has calendared oral argument for March 25, 2025.

All of this means that, as of the date of this article, reporting companies are still currently NOT required to report beneficial ownership information to FinCEN in January 2025. On December 27, 2024, FinCEN issued a statement advising that it would continue to accept voluntary reports. PSRB will continue to track any further statements by FinCEN, as well as further decisions from the Fifth Circuit. Please reach out to Ali Sylvia, Joanne Sommers, and Mary Claire Tuohy with questions about how these developments may affect your reporting obligations. 

Categorized: News

Tagged In: Corporate Transparency Act, CTA, finCEN