The world keeps turning and the litigation surrounding the Corporate Transparency Act (CTA) keeps evolving. A December 26, 2024 ruling has again ceased enforcement of the CTA… for now.
Background
The CTA was introduced to enhance corporate transparency by mandating certain entities to report detailed ownership information to the Financial Crimes Enforcement Network (FinCEN). This regulation targets shell companies often used to obscure illegal activities. Businesses subject to the CTA were initially required to submit their Beneficial Ownership Information Reports (BOIR) by January 1, 2025.
On December 3, 2024, the U.S. District Court of the Eastern District of Texas, Sherman Division, issued a ruling granting a nationwide preliminary injunction against the CTA. Said injunction prevents enforcement of the CTA, to include the January 1, 2025 reporting deadline.
On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the U.S. District Court of the Eastern District of Texas’s ruling granting a nationwide preliminary injunction against the CTA pending the outcome of the Department of the Treasury’s ongoing appeal. Therefore, the CTA is again being enforced only with a slight change in deadlines.
The Recent Court Ruling
On December 26, 2024, the merits panel of the United States Court of Appeals of the Fifth Circuit issued an order vacating a portion of the December 23, 2024 ruling. The portion of the December 23, 2024 ruling granting the Government’s motion to stay the nationwide injunction has been vacated. Therefore, as of December 26, 2024, the CTA is NOT being enforced and entities are NOT required to file BOIRs.
What’s Next?
As we’ve seen thus far, the whirlwind litigation surrounding the CTA continues to barrel on. It is our belief that the safest option for businesses at this point is to error on the side caution and continue to comply with the CTA. Nonetheless, businesses should monitor developments closely.
