UPDATE: On March 21, 2025, the Financial Crimes Enforcement Network issued an Interim Final Rule removing Beneficial Ownership Information Reporting requirements for U.S. companies and U.S. individuals under the Corporate Transparency Act. For more details, please view our latest alert here.
On December 26, 2024, the United States Court of Appeals for the Fifth Circuit reinstated the nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (the “Act”). This decision comes just three days after an order from a separate panel of judges from the same Court was issued to stay the preliminary injunction and which had, temporarily, reinstated compliance requirements under the Act. This means that the December 3rd injunction halting enforcement of the Act is now back in place and that there is no current requirement to comply with the Act while the injunction remains in effect. Given these contrasting decisions, and the possibility of further ones, it is important that parties subject to the Act remain aware of its status.
For the time being, as a result of the December 26, 2024 decision, all filing deadlines under the Act have been stayed, and Reporting Companies are not required to comply with the Act’s filing deadline or other obligations while the injunction remains in effect. Additionally, so long as the injunction remains in place, any entity that has already complied with the Act’s reporting requirements does not need to take any further action, including filing updated or corrected reports.
The past several weeks of court decisions have left the Act and its enforcement in limbo multiple times. The decisions of the Fifth Circuit follow an order of a Texas federal court on December 3, 2024, which initially instituted the nationwide preliminary injunction against the Act. On December 23, 2024, a motions-panel of the Fifth Circuit granted a stay of the preliminary injunction. This stay reversed the nationwide preliminary injunction and reinstituted the filing requirement and the January 1st filing deadline. Hours after the December 23, 2024 decision, the Financial Crimes Enforcement Network (“FinCEN”) responded by extending the filing deadline until January 13, 2025. Subsequently, as mentioned above, on December 26, 2024, a merits-panel of the Fifth Circuit, and the same panel which will handle the merits of the appeal, has lifted the stay and vacated the original order of the Fifth Circuit, resulting in the continued suspension of reporting requirements under the Act.
It is important to note that this situation continues to evolve, as the merits panel of the Fifth Circuit has expedited the case’s briefing schedule and, further, litigants could file an appeal with the United States Supreme Court following any subsequent Fifth Circuit decision.
Barley Snyder will continue to follow the Act closely and provide timely updates as new information is released. If you have any questions regarding this decision or the Act generally, please contact Dan Desmond, Charmaine Nyman, Caitlin Long, or any member of Barley Snyder’s Business Practice Group. You may also visit our Corporate Transparency Act Response Team webpage for more information and previous alerts on this matter.
