Fifth Circuit Reinstates Injunction and Halts Enforcement of Corporate Transparency Act

Update:

Effective, December 26, 2024, the United States Court of Appeals for the Fifth Circuit has reinstated the nationwide injunction discussed in this post. As of that date, FinCen may not take enforcement actions against business owners who do not comply with the deadlines imposed by the CTA. We will provide additional updates as the Fifth Circuit continues considering the constitutionality of the CTA.

 

 

The Fifth Circuit Court of Appeals has granted a temporary stay of the U.S. District Court of the Eastern District of Texas’ injunction regarding enforcement of the Corporate Transparency Act (“CTA”).

On December 3, 2024, the Eastern District of Texas granted a preliminary injunction, staying enforcement of the CTA.^[1] The injunction granted by the Eastern District of Texas applied to non-exempt entities nationwide.

As a result of the Fifth Circuit’s order reporting requirements and deadlines are once again enforceable. This means that non-exempt entities are required to file a beneficial owner information report (“BOIR”) with the Financial Crimes Enforcement Network (“FinCen”), as follows^[2]:

• Applicable entities created before January 1, 2024, are required to file their initial BOIR by January 13, 2025. Notably, the previous January 1, 2025, compliance deadline has been extended. Applicable entities that were created on or after September 4, 2024, that had a filing deadline between December 3, 2024, and December 23, 2024, also have until January 13, 2025, to file their initial BOIR with FinCen.
• Applicable entities created in 2024 are required to file their BOIR within 90 days of creation. Applicable entities created on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their initial BOIR with FinCen.
• Applicable entities created on or after January 1, 2025, will be required to file their BOIR within 30 days of creation. 
• In addition, applicable entities created prior to 2024 that were in existence on or after January 1, 2024, but ceased to exist prior to January 1, 2025, deadline for filing initial their BOIR are still required to file an initial BOIR by the January 13, 2025, deadline.
• Similarly, applicable entities created in or after 2024 that ceased to exist prior to the applicable 90-or 30-day deadline for filing their initial BOIR report are required to file an initial BOIR report within 90 or 30 days of its formation, as applicable.

The Fifth Circuit will next consider the constitutionality of the CTA and has ordered that the case be argued at the next available oral argument panel. Still, small business owners should plan to comply with the CTA’s reporting requirements before the deadlines noted above.  

If you would like more information or have any questions, please reach out to a DeWitt Business Attorney.