Appeals Court Pauses CTA Reporting Requirements

Yesterday (December 26), the U.S. Fifth Circuit Court of Appeals (“Fifth Circuit”) vacated the order it issued December 23, 2024, in Texas Top Shop v. Garland and temporarily reinstated the nationwide injunction against enforcement of the Corporate Transparency Act (“CTA”) issued December 3, 2024, by a U.S. District Court in Texas. This means that CTA reporting requirements are on hold while the Fifth Circuit considers the government’s appeal of the injunction. The Fifth Circuit’s latest decision can be read here.

Based on its prior response to the issuance of the injunction, we expect FinCEN to update its website to acknowledge reinstatement of the injunction and to indicate that reporting companies are not obligated to (but may voluntarily) report beneficial ownership information while the injunction is in effect.

As noted above, the Fifth Circuit’s stay of the injunction is temporary, meaning it’s in effect while the Fifth Circuit considers the merits of the government’s appeal from the District Court’s injunction, so further developments are expected and should be monitored closely.

Our advice in our December 4 Alert (reporting on issuance of the injunction) remains unchanged:

• Reporting companies should continue gathering the information they need to file their BOI reports so if the injunction is lifted they are able to comply with the filing requirements on a timely basis.
• Reporting companies that have assembled all information needed to file their BOI reports may file their BOI reports voluntarily to avoid the need for ongoing monitoring of the pending litigation.