Federal Court Issues Injunction, Barring Enforcement of the Corporate Transparency Act
Fifth Circuit Court of Appeals Vacates Stay of CTA Preliminary Injunction, Barring Enforcement of the CTA and Reporting Rule
On December 26, 2024, the United States Court of Appeals for the Fifth Circuit vacated the stay of the nationwide preliminary injunction of the Corporate Transparency Act (CTA) and Beneficial Ownership Information Reporting Rule (Reporting Rule), which requires corporate entities to disclose the identities of their beneficial owners. This order reinstates the nationwide injunction imposed by a federal district court on December 3rd , 2024, and again halts enforcement of the CTA and Reporting Rule.
The immediate effect of the Court’s order is that reporting companies do not have to comply with the CTA’s filing deadlines. While reporting companies are not currently required to file by the filing deadline, FinCEN is still accepting beneficial ownership information (BOI) reports.
Summary of Recent Developments
December 3, 2024: A federal district court judge in Texas concluded that the CTA was likely unconstitutional and implemented a nationwide injunction, suspending enforcement of the CTA and Reporting Rule.[1] The Government subsequently filed for an emergency stay of the injunction pending their appeal of the district court’s ruling.
December 6, 2025, FinCEN announced that reporting companies did not have to comply with the CTA and Reporting Rule deadlines due to the nationwide injunction. However, FinCEN would still accept filings if submitted.
December 11, 2024: The government filed a “Motion to Stay Pending Appeal” with the district court. The district court denied the motion, and the government appealed.
December 23, 2024: The Fifth Circuit’s motion panel, comprised of three judges, ordered a stay of the injunction, which permitted FinCEN to enforce the CTA and Reporting Rule. FinCEN then extended certain filing deadlines.
December 24, 2024: The plaintiffs sought emergency en banc review (i.e. review by the full court) of the three-judge panel’s decision, requesting that the Fifth Circuit reverse the decision to stay the injunction by January 6, 2025.
December 26, 2024: Despite the three-judge panel lifting the injunction only days prior, the Fifth Circuit vacated the stay to preserve the “constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” Briefings on the merits of the nationwide injunction are currently due February 2025 with oral arguments scheduled for March 25, 2025.
Next Steps
Whether the CTA is enforceable is subject to further action by the court. If you have any questions about the status of the injunction, whether the CTA applies to your company, or completing the BOI filing process, please contact the Kessler Collins team for assistance.
[1] Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Texas Dec. 3, 2024).
