What this is: On December 26, 2024, the Fifth Circuit Court of Appeals reversed its order lifting the nationwide preliminary injunction on Corporate Transparency Act (CTA) enforcement.
What this means: This puts the injunction back in effect and makes the filing of beneficial ownership information reports (BOIRs) under the CTA voluntary again while the injunction remains in force.
Background:
- On December 3, 2024, a Texas District Court in the case, Texas Top Cop Shop vs. Garland, issued a nationwide preliminary injunction (“the injunction”) against enforcement of the Beneficial Ownership Information (BOI) reporting requirements of the CTA.
- As a result of the District Court’s order, from December 3, 2024 to December 23, 2024, FinCEN continued accepting BOIRs submitted on a voluntary basis, but no reporting companies (as that term is defined in the CTA and its implementing regulations) were required to file BOIRs while the injunction was in force, despite the filing deadlines mandated in the CTA’s regulations.
- The government appealed the District Court’s issuance of the injunction to the Fifth Circuit Court of Appeals (“the Fifth Circuit”), seeking to have the injunction lifted.
- On December 23, 2024, a motion panel of 3 Fifth Circuit judges granted the government’s appeal and lifted the District Court’s injunction, making BOI reporting under the CTA mandatory again. As a result, FinCEN extended the January 1, 2025 deadline to January 13, 2025 for non-exempt reporting companies in existence prior to this year to file their BOI reports and gave extensions to non-exempt reporting companies created during 2024 whose reports came due while the injunction was in force.
- Meanwhile, the Texas Top Cop Shop plaintiffs requested a Fifth Circuit rehearing of its December 23, 2024 order lifting the injunction.
- On December 26, 2024, the Fifth Circuit reversed its December 23, 2024 order, and reinstituted the injunction effective immediately.
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Therefore, as of today, and for as long as the injunction remains in force, Beneficial Ownership Information reporting under the CTA is once again voluntary. |
Cogency Global cannot advise on whether a reporting company should submit a voluntary BOIR while the injunction is in force. Reporting companies should seek legal guidance from their counsel to make that determination. However, if you wish to submit a voluntary BOIR to FinCEN, Cogency is here to assist. For further information on our CTA services, please visit our CTA Resources page or contact your Cogency Global representative.
The status of the CTA remains in flux as multiple courts address its constitutionality. No one knows how long the nationwide preliminary injunction will remain in force. Therefore, it is essential to keep a close watch on CTA developments.
