Key Takeaway: A Texas federal judge issued a nationwide injunction, but it was stayed by an appeals court. Now that stay has been lifted — so the injunction is in force again.

As the year-end filing deadline approached for the Corporate Transparency Act (CTA), we’ve seen a dizzying series of court rulings that put a freeze on any enforcement of the law with a preliminary injunction, then stayed that injunction and, most recently, vacated the stay order, putting the injunction in effect again.

For entities subject to the Jan. 1, 2025 deadline to file beneficial owner information (BOI) disclosures, the rulings have created uncertainty.

However, our recommendation has remained the same throughout. Because the now-reinstated injunction may be lifted at any time, it is prudent to either: 

  • Comply with the filing requirements to avoid missing any applicable deadlines in the event this holding is overturned in the coming days or weeks

OR

  • Hold off on filing, but finalize the analysis to determine whether they are exempt from filing under their CTA and, for those that are not exempt, continue to identify and gather required information relating to their beneficial owners to prepare for eventual compliance.

Constitutional Challenge 

On Dec. 3, U.S. District Judge Amos Mazzant of the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, after finding Congress likely exceeded its authority in passing the law.

The government appealed and requested a stay of the injunction. On Dec. 23, 2024, a three-judge motions panel of the Fifth Circuit granted an emergency motion for a stay pending appeal. Hours later, the U.S. Financial Crimes Enforcement Network (FinCEN) said it would extend some of the law’s filing deadlines.

Just three days later, on Dec. 26, the Fifth Circuit issued another order. The three-judge merits panel, who will decide the appeal, vacated the stay “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”

The appeal will be heard on an expedited schedule.

On Dec. 27, FinCEN posted a new alert on its website that acknowledged the injunction but invited voluntary compliance.

“Reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports,” the alert states.

The members of Fox Rothschild’s CTA Compliance Team continue to monitor Texas Top Cop Shop and other court cases relating to the CTA and will provide relevant updates as they become available. In the meantime, our attorneys are available to assist with your CTA compliance questions. Please note that if you intend to engage us to assist with these matters, we encourage you to reach out as soon as possible so that we are able to provide you with timely advice, as we expect to be handling a high volume of requests now through the end of the year. Contact Kevin Granahan, Christopher Pippett or any other attorney at Fox Rothschild with whom you maintain a relationship.