Corporate Transparency Act Current Developments

Current Developments

The legal landscape surrounding the Corporate Transparency Act (CTA) has shifted again. On December 26, 2024, the “merits” panel of the Fifth Circuit Court of Appeals vacated a prior stay, reinstating the nationwide preliminary injunction issued by the U.S. District Court for the Eastern District of Texas. This means enforcement of the CTA’s Beneficial Ownership Information (BOI) reporting requirements is once again suspended nationwide. Consequently, the recently announced BOI filing deadlines from FinCEN no longer apply at this time.

Recap of Key Events

• December 3, 2024: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction, halting enforcement of the CTA’s reporting requirements.
• December 23, 2024: A panel of the Fifth Circuit stayed the preliminary injunction pending appeal, reinstating the BOI reporting requirements.
• December 26, 2024: The Fifth Circuit vacated the stay, reinstating the preliminary injunction and halting BOI reporting nationwide.

Following the December 26 decision, FinCEN clarified:

• Reporting companies are not obligated to file BOI reports while the injunction remains in effect.
• There is no liability for noncompliance during this time.
• Companies may still voluntarily submit BOI reports if they choose.

What This Means for You

At present, there is a temporary pause on compliance obligations under the CTA. However, the situation is evolving, with oral arguments in the Fifth Circuit scheduled for March 25, 2025. Other pending cases and potential appeals may further impact compliance obligations.

Next Steps

• Stay Informed: Monitor developments from the courts and additional guidance from FinCEN.
• Assess Compliance Preparedness: Consider your readiness for reporting should the injunction be lifted.
• Rely on Trusted Advisors: Hoge Fenton will continue tracking this situation closely and will provide updates as new developments arise.