On December 26, 2024, a merits panel of the U.S. Court of Appeals for the Fifth Circuit reestablished the nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA) by the Financial Crimes Enforcement Network (FinCEN).
Pursuant to the preliminary injunction, FinCEN issued an alert on December 27, 2024, stating that all reporting companies under the CTA are not currently required to file beneficial ownership information with FinCEN and further, that all reporting companies are not subject to liability if they fail to file while the preliminary injunction remains in place. However, FinCEN also noted that reporting companies may continue to voluntarily submit beneficial ownership information reports.
The Fifth Circuit expedited the appeal and scheduled oral argument in the case for March 25, 2025. FinCEN responded by filing an application asking the Supreme Court to stay the injunction pending resolution of the appeal to the Fifth Circuit or, if FinCEN loses in the Fifth Circuit, pending resolution in the Supreme Court. In the alternative, FinCEN requested that the Court narrow the injunction in scope such that it would apply only to the parties in the case. The Court requested a response to the application by 4 p.m. (EST) on January 10, 2025.
Given continued uncertainty regarding when, or whether, the CTA filing deadline will be reinstated, reporting companies should carefully consider their options, and should be prepared to file on short notice if the preliminary injunction is stayed, narrowed, or otherwise vacated.
If you, as a business owner, would like to know how you will be impacted by the future of the CTA, please feel free to contact Sean Barrick (sbarrick@setlifflaw.com) at (804) 377-1276 or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.
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