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Breaking: Nationwide Preliminary Injunction Back in Place for CTA

In a huge turn of events, on December 26, 2024, a separate panel (the “merits” panel) of the Fifth Circuit Court of Appeals issued a decision vacating the original panel (the “motions” panel) of the Fifth Circuit’s stay of the nationwide preliminary injunction halting enforcement of the Corporate Transparency Act (CTA), effectively meaning that the nationwide preliminary injunction halting the enforcement of the CTA is back in place.

For background, as outlined in our original blog, in the case of Texas Top Cop Shop v. Garland et al., No. 4:24-cv-478 (E.D. Tex. Dec 3, 2024), the US District Court for the Eastern District of Texas granted a nationwide preliminary injunction that temporarily enjoined or prohibited the US government from enforcing the CTA. Then, as outlined our follow-up blog, on December 23, 2024, a panel (the “motions” panel) of the Fifth Circuit Court of Appeals stayed the injunction, meaning that the CTA once again applied to reporting companies (with limited reporting deadline extensions subsequently being offered by FinCEN, as outlined the aforementioned follow-up blog). However, on December 26, 2024, in a two-page decision available here, a separate panel (the “merits” panel) of the Fifth Circuit vacated the part of the Fifth Circuit’s previous decision staying the injunction, such that the US government is once again subject to the preliminary injunction granted by the District Court temporarily enjoining or prohibiting the US government’s enforcement of the CTA.

Clearly, this matter is quickly developing. However, so long as the nationwide preliminary injunction remains in place, our guidance remains similar to that we originally provided when the nationwide preliminary injunction was first granted. The nationwide preliminary injunction temporarily pauses enforcement of the CTA on a nationwide basis, but enforcement could resume if the injunction is vacated on appeal (again) or the US government ultimately prevails on the merits. Reporting companies have the option to either: (a) file their CTA reports in accordance with otherwise applicable deadlines in the case that the District Court’s nationwide preliminary injunction is vacated (again) on appeal or the US government ultimately prevails; or (b) abstain from filing any CTA reports until there are further developments requiring otherwise. If reporting companies choose to go the latter route, it is strongly encouraged that they actively monitor developments on this topic and, better yet, be prepared to file their CTA reports on a tight turnaround should the injunction be lifted and a short deadline be imposed for compliance.

We will continue to monitor developments and will provide additional information as it becomes available. If you have any questions regarding the CTA or the matters discussed herein, please do not hesitate to contact your BrownWinick attorney.