Breaking: Nationwide CTA Injunction Stayed; CTA Reporting Obligations Reinstated With Some Extensions

As anticipated in our previous blog, the United States Court of Appeals for the Fifth Circuit issued a decision implicating the nationwide preliminary injunction previously issued by the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop v. Garland et al., No. 4:24-cv-478 (E.D. Tex. Dec 3, 2024) that temporarily blocked the enforcement of the Corporate Transparency Act (CTA) and its implementing regulations.

On December 23, 2024, the Fifth Circuit stayed the nationwide preliminary injunction. The Fifth Circuit’s decision effectively reinstates all CTA filing deadlines, including the January 1, 2025 filing deadline for reporting companies that were formed before 2024. However, since the Fifth Circuit’s decision, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) announced several short extensions to the CTA filing deadlines, including delaying the filing deadline for reporting companies formed prior to January 1, 2024 for 12 days, meaning that the new filing deadline for such existing reporting companies is January 13, 2025.

Accordingly, reporting companies that have not yet filed their CTA report should immediately resume all CTA filing efforts and submit their reports prior to the applicable deadlines (the extensions to which are further discussed below).

Decision by the Fifth Circuit

The Fifth Circuit granted the U.S. government’s emergency request for a stay of the nationwide preliminary injunction, pending further decision of the Fifth Circuit, and ordered that the U.S. government’s appeal to the Fifth Circuit be expedited to the next available oral argument panel. In doing so, the Fifth Circuit analyzed a multi-factor test for granting such stays, including whether the government would be irreparably injured absent a stay and whether the government has made a strong showing that it is likely to succeed on the merits. When balancing the equities, the Fifth Circuit concluded that the government will likely suffer irreparable harm if it is enjoined from enforcing a statute “enacted by representatives of the people” while businesses subject to the CTA will suffer minimal harm if required to file a CTA report. Interestingly, the Fifth Circuit concluded that the government is “likely to succeed on the merits in defending [the] CTA’s constitutionality”, which is a preview of how it might rule should the Eastern District of Texas ultimately conclude that the CTA is unconstitutional and the Fifth Circuit.

Extensions by FinCEN

FinCEN promptly issued a press release after the Fifth Circuit’s decision on December 23, 2024, in which FinCEN stated that “because the Department of the Treasury recognizes that reporting companies may need additional time to comply given the period when the preliminary injunction had been in effect”, FinCEN is extending the CTA reporting deadlines as follows:

• Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
• Reporting companies created or registered in the U.S. on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies created or registered in the U.S. 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 beneficial ownership information reports with FinCEN.
• Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
• Reporting companies that are created or registered in the U.S. on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

We will continue to monitor developments pertaining to the CTA and will report those developments as soon as we are able. Until then, reporting companies that have not yet filed their CTA report should immediately resume all filing efforts in order to submit their reports by the applicable deadline.

Please see the most recent blog post dated 12-27-24 for the current status regarding CTA.