Fifth Circuit Reverses Course on Corporate Transparency Act
December 30, 2024
The merry-go-round continues for business owners trying to stay on top of the filing requirements under the Corporate Transparency Act (“CTA”).
On December 26, 2024, the United States Court of Appeals for the Fifth Circuit reinstated the nationwide preliminary injunction of the CTA in anticipation of an expedited ruling on its legal merits. As of the date of this update, the CTA deadline is paused pending the outcome of this ruling.
The CTA, which went into effect January 1, 2024, requires all non-exempt companies to file a Beneficial Ownership Information Report (“BOIR” or “BOI Report”) with the U.S. Financial Crimes Enforcement Network (“FinCEN”), disclosing certain information about the beneficial owners of the company. Such information included the beneficial owner’s name, date of birth, residential address, and information from (including an image of) a government-issued identification document.
On December 3, 2024, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the federal government from enforcing the CTA. Less than three weeks later, on December 23, the United States Court of Appeals for the Fifth Circuit lifted the nationwide preliminary injunction. In response, FinCEN, the federal agency charged with enforcing the CTA, announced the reporting deadline was extended to January 13, 2025. Three days later, on December 26, the Fifth Circuit reversed course and reinstated the preliminary injunction.
FinCEN is still accepting voluntary BOIR filings. If a company opts not to file a BOIR at this time, beneficial owners should consider preparing the necessary information to file quickly if the court upholds the CTA filing requirements.
We will continue to monitor this very fluid case closely and provide updates as they are available.
Carolyn Lavin DeVaughn is an Associate Attorney with Gross Shuman P.C. She concentrates her practice in the areas of corporate law, banking and finance, and estate planning. Carolyn works with businesses across a wide range of industries on all aspects of their business operations. She also works closely with clients on securing the funding to complete complex commercial real estate purchases, loans, and refinancing agreements. You can reach Carolyn at 716-854-4300 ext. 242 or [email protected]
