On Thursday, Dec. 26, 2024, three days after issuing a stay on the injunction against enforcement of the Corporate Transparency Act (CTA), the U.S. Fifth Circuit Court of Appeals vacated its own ruling and reinstated the injunction. As a result, reporting companies are once again temporarily relieved of the obligation to file a beneficial ownership information (BOI) report, pending resolution of this fast-paced litigation.  

After the Court of Appeals granted the Department of Justice’s motion to stay the initial injunction on enforcement, the Financial Crimes Enforcement Network (FinCEN) quickly rolled out a new timetable for compliance that required many reporting companies to submit BOI reports by Jan. 13, 2025. However, by staying the injunction while litigation regarding the CTA’s constitutionality was ongoing, the Court risked mandating enforcement of an unconstitutional law - a possibility the Court seemingly hopes to avoid by vacating its own ruling days after issuance. 

The rapid reversal once again puts the fate of the CTA up in the air and raises a host of new questions for those who must comply if the CTA is ultimately declared constitutional. FinCEN issued an alert today (Dec. 27, 2024) acknowledging the Dec. 26 ruling and stated, in pertinent part, as follows: “[i]n light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force.” FinCEN, Beneficial Ownership Information. FinCEN left open the option to voluntarily submit BOI reports.

For businesses, this means the obligation to file is paused while substantive arguments regarding the CTA’s constitutionality are weighed by the Court. For FinCEN, it presents the risk that even if the CTA is ultimately declared constitutional, the filing deadline may be moved after the upcoming transition of power to an administration that may take an adversarial stance to enforcement the CTA.

Armstrong Teasdale will continue to monitor this litigation and related guidance from FinCEN. Please do not hesitate to contact a member of our CTA team or your regular Armstrong Teasdale attorney if you have any questions regarding the implications of the injunction, what it means for CTA reporting obligations, or any other CTA concerns.