Highlights
- The Fifth Circuit granted a stay of the nationwide injunction that previously suspended enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) Reporting Rule
- The stay reinstitutes obligations under CTA to file initial BOI reports by Jan. 1, 2025
On Dec. 23, 2024, the United States Court of Appeals for the Fifth Circuit granted a stay of the injunction issued earlier this month that halted enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information Reporting Rule.
Jan. 1, 2025, Deadline Back in Effect
For companies created prior to 2024, the obligation to submit initial beneficial ownership information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN) before the Jan. 1, 2025, deadline is, again, effective. For companies created in 2024, the initial BOI report is due within 90 days of formation.
Court Ruling
On Dec. 3, 2024, the U.S. District Court for the Eastern District of Texas had issued a nationwide preliminary injunction temporarily suspending enforcement of the CTA and related reporting rules. The injunction effectively suspended the requirement under the CTA for reporting companies to disclose their BOI to FinCEN.
The government filed an emergency motion with the Fifth Circuit seeking a stay of that injunction.
The Fifth Circuit has now granted a stay of that injunction pending appeal noting that, “[t]he district court concluded that [the CTA and the Reporting Rule] are unconstitutional and issued nationwide injunctions against each, despite no party requesting it do so and despite every other court to have considered this issue tailoring relief to the parties before it or denying relief altogether.”
The Fifth Circuit further stated that, “the government has made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality.”
Timely Filing Required
With the earlier injunction stayed, reporting companies must again comply with the CTA reporting deadlines. The ruling, however, is not a final determination of the CTA’s constitutionality; instead, it permits enforcement while the case proceeds. While it is possible that FinCEN may extend the filing deadline, it has not yet done so.