Injunction Suspending Enforcement of Corporate Transparency Act Reinstated
By: Katie S. Riles and Ryan L. Leitch
As we previously reported, on December 3, 2024, the United States District Court for the Eastern District of Texas entered a nationwide preliminary injunction suspending (temporarily) the enforcement of the Corporate Transparency Act. Thereafter, on Monday, December 23, 2024, a motions panel of the United States Court of Appeals for the Fifth Circuit granted the government’s emergency motion for a stay of the preliminary injunction pending appeal, which reinstated the enforcement of the Corporate Transparency Act. In response to that December 23, 2024 order, the Financial Crimes Enforcement Network (“FinCEN”) extended the initial beneficial ownership reporting deadline for reporting companies existing prior to January 1, 2024 to January 13, 2025.
On Thursday, December 26, 2024, the United States Court of Appeals for the Fifth Circuit took further action and VACATED its December 23, 2024 order, which had lifted the injunction, meaning that the December 3, 2024 injunction is back in place and enforcement of the Corporate Transparency Act is suspended as of the time of this article. The attorneys at Riley Bennett Egloff LLP are continuing to carefully monitor developments in this matter.
Because of the uncertainty of the situation, we recommend that reporting companies existing prior to January 1, 2024 who have not yet filed an initial beneficial ownership report remain prepared to do so by the updated January 13, 2025 filing deadline. Should the injunction be lifted prior to that January 13, 2025 deadline, the obligation to file would be immediately reinstated – absent a further extension by FinCEN. Alternatively, if the injunction is lifted after January 13, 2025, we do not believe FinCEN would lawfully penalize anyone who failed to file by that deadline. Presumably, in that situation, a prompt obligation to file would be required.
Although FinCEN has not yet issued any public statements about this most recent decision, we do expect further guidance from FinCEN in relation to the reinstatement of this injunction. If and when our recommendation on this matter changes, we will provide an update.
The attorneys at Riley Bennett Egloff continue to follow the development of CTA. If you have questions as to whether your company qualifies for an exemption under CTA, if you need help in completing the BOI Report (including identifying your “beneficial owners”), or if you have any other questions regarding the CTA, please contact us and we will be happy to assist you.
Katie S. Riles, Partner
Katie (Cannon) Riles represents businesses, and business owners in a variety of matters, including entity selection, formation and governance, shareholder disputes, mergers and acquisitions, and contract negotiation, drafting, and interpretation. Katie also assists individuals in estate and succession planning, business succession planning, and other legal matters.
Ryan L. Leitch, Partner
Ryan Leitch represents businesses and business owners including those in manufacturing, retail, distributors, software and technology, construction, sale, and other service industries in numerous business matters. The variety of business matters includes entity selection and organization, employment, mergers and acquisitions and other transactions, loan transactions, general contractual matters, disputes among shareholders/members, and in business succession planning to assist owners in transferring/selling their business ownership to family members or employees.
Ryan represents individuals in estate and succession planning, including preparation of Wills, Trusts, Power of Attorney and health care designations, and other legal matters, and probate and administration of Wills and Trusts. Ryan also has experience in representing lenders in large, complex creditors’ rights cases.
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Posted December 27, 2024, by Katie S. Riles and Ryan L. Leitch.