Nationwide Preliminary Injunction of CTA

is Reinstated

On December 26, 2024, a merits panel of the Fifth Circuit Court of Appeals issued an order (Vacatur Order) to vacate the stay that a motions panel of the same court issued on December 23, 2024, to reinstate the effectiveness of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting rule (Reporting Rule).

The Vacatur Order reverses the course of the CTA and reinstates the nationwide preliminary injunction against enforcement of the CTA and the Reporting Rule that was originally entered in the case of Texas Top Cop Shop, Inc. v. Garland, et. al., No. 4:24-cv-00478 (E.D. Tex.) on December 3, 2024. The Court of Appeals explained that it took this action “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.”

In response to the Vacatur Order, FinCEN updated its website on December 27, 2024, noting that:

In light of [the Vacatur Order], reporting companies are not

currently required to file [BOI] with FinCEN and are not subject

to liability if they fail to do so while the [Vacatur Order]

remains in force. However, reporting companies may

continue to voluntarily submit [BOI] reports.

As a result of the Vacatur Order, no filings under the CTA are currently required by law, including the initial BOI reports that reporting companies formed or registered prior to 2024 were required to file by Jan. 13, 2025, pursuant to an extension that FinCEN granted. Although the CTA is once again enjoined, reporting companies and affected individuals should continue to closely monitor CTA developments and consult with counsel to be prepared to file their BOI reports if the injunction is once again stayed, lifted, or otherwise made ineffective