Late on December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit reversed its own decision from earlier in the week, reinstating the nationwide preliminary injunction preventing the enforcement of the Corporate Transparency Act.
If and when reinstated, the Corporate Transparency Act (CTA) will require many entities formed or registered in the United States to file information about their beneficial owners and management with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). The CTA was enacted in 2021 and went into effect on January 1, 2024. The filing deadline for companies formed prior to January 1, 2024 was initially set at January 1, 2025. However, on December 3, the U.S. District Court for the Eastern District of Texas entered a preliminary injunction prohibiting the enforcement of the CTA nationwide, thereby suspending all filing obligations and deadlines under the CTA. The government appealed this decision to the U.S. Court of Appeals for the Fifth Circuit, and, on Monday, December 23, the Fifth Circuit issued an order lifting the District Court’s injunction. In the most recent turn of events, on December 26, the Fifth Circuit reversed its own order from earlier in the week, re-imposing the injunction on the CTA’s enforcement and again suspending all filing deadlines while the Fifth Circuit Court of Appeals considers the government’s appeal.
As things stand today (December 27, 2024), the CTA cannot and will not be enforced, and the filing deadlines under the CTA and its regulations are suspended while the Fifth Circuit is considering the appeal. Oral argument before the Fifth Circuit on the matter has been scheduled for March 25, 2025. This may suggest that the injunction suspending the enforcement of the CTA and its filing deadlines will remain in place at least until that date. However, given the fits and starts that have plagued the CTA over the last month and week in particular, the law’s status and long-term outlook are far from certain.
