On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction enjoining enforcement of the Corporate Transparency Act (31 U.S.C. § 5336; “CTA”), the underlying beneficial owner reporting rule (31 C.F.R. 1010.380), and stayed the January 1, 2025 compliance deadline to file beneficial owner reports.[1] The scope of the injunction is nationwide, unlike the injunction issued in the NSBU v. Yellen case by the Northern District of Alabama earlier this year.[2]
UPDATE (December 31, 2024)
On December 23, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction of the Corporate Transparency Act’s beneficial owner reporting deadlines and requirements, effectively reinstating the original reporting deadlines (although FinCEN subsequently extended certain deadlines by a few weeks). However, on December 26, 2024, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order[3] vacating the Court’s December 23, 2024 order, thereby reinstating the preliminary injunction issued by the district court. Accordingly (and as confirmed by FinCEN), the CTA deadlines are stayed (for now) and business owners “are not currently required to file beneficial ownership information with FinCEN.”[4]
Business owners will need to stay tuned for further developments as the Texas Top Cop Shop, Inc. and National Small Business United cases make their way through the federal appellate courts.
If you need assistance in assessing your business’s responsibilities under the CTA, please contact Andrew Hazen (ahazen@fh2.com; 770-771-6818) or visit fh2.com to learn more about how the attorneys at Friend, Hudak & Harris, LLP can help.
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[1] See Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Tex.).
[2] See National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.).
[3] See https://www.ca5.uscourts.gov/opinions/unpub/24/24-40792..pdf.
[4] See https://fincen.gov/boi (“Alert [December 27, 2024]”).
