U.S. Supreme Court Lifts Fifth Circuit Court of Appeals Injunction Reinstating Filing Requirements Under Corporate Transparency Act

This is the sixth installment in our ongoing series of client alerts on the Corporate Transparency Act (the “CTA”).

History and Background

On December 3, 2024, the U.S. District Court for the Eastern District of Texas (the “District Court”) determined that the CTA was likely unconstitutional and issued a nationwide preliminary injunction that enjoined the CTA and enforcement of the reporting rules under the CTA and stayed the January 1, 2025, compliance deadline.

The U.S. Department of Justice (the “DOJ”) appealed this decision to the Fifth Circuit Court of Appeals (“Appeals Court”), and on December 23, 2024, the Appeals Court stayed the District Court’s injunction pending appeal. By an order issued on December 26, 2024, the Appeals Court reinstated the injunction imposed by the District Court. The DOJ filed an appeal to the Supreme Court of the United States (“Supreme Court”), asking the Supreme Court to lift the injunction imposed by the Appeals Court pending the hearing on the merits of the case. Said hearing is scheduled for March 25, 2025.

In December 2024, the Financial Crimes Enforcement Network (“FinCEN”) extended the deadline to file to January 13, 2025, for reporting companies formed prior to January 1, 2024.

Latest News: Supreme Court Order

On January 23, 2025, the Supreme Court stayed the injunction imposed by the Appeals Court. As a result, reporting companies are again required to submit beneficial ownership information reports under the CTA.

Action May Be Required

For most reporting companies, since the Appeals Court injunction has been lifted, the deadline to file has already occurred. Although it is possible that FinCEN will extend the deadline to file in response to the Supreme Court’s order or waive penalties for certain reporting companies that have not filed by the deadline, as of the publication of this alert, FinCEN has not taken any action in response to the Supreme Court’s order. Accordingly, reporting companies required to file a beneficial ownership information report may wish to file as soon as possible.

We will send another alert if and when any action is taken by FinCEN with respect to filing deadlines.

Please reach out to AGG Corporate & Finance co-chair Sherman Cohen or your AGG relationship partner with any questions.