On December 3, 2024, there was an unexpected order by the U.S. District Court for the Eastern District of Texas. The court issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA), questioning whether CTA violates the U.S. Constitution. Since then, there have been additional filings by FinCEN to the courts. The following provides a very basic breakdown of where we stand.
Potential Short Term Outcomes
FinCEN (the agency responsible for the CTA Beneficial Ownership Information reports (BOIRs) has filed a motion with the U.S. Court of Appeals for the Fifth Circuit requesting the Fifth Circuit stay all or part of the injunction the lower court imposed. The outcomes could be:
The nationwide injunction continues.
The injunction continues only as to the parties who brought the case in the lower court and everyone else must file BOIRs.
The entire injunction is overturned and everyone including the parties that brought the case must file BOIRs.
If any part of the injunction is overturned, the court could say the BOIRs must be filed by January 1, 2025 or the BOIRs must be filed by a date set by the court.
Court Schedule
The court schedule for determining the fate of the preliminary injunction is as follows:
The parties claiming CTA violates the U.S. Constitution must file their response with the Fifth Circuit by December 17, 2024.
FinCEN must file its reply with the Fifth Circuit by December 19, 2024.
The Fifth Circuit will then consider the written arguments and issue a decision. There is no specific date by which the court will issue its decision.
Next Steps
You may continue to wait to see what the court decides or you may file a BOIR. The FinCEN portal continues to be open and companies can continue to submit reports, updates, and corrections on a voluntary basis. I recommend you look at the very useful materials on the FinCEN site: fincen.gov/boi.
For assistance, please contact me via my contact page or at elizabeth@elizabethmcmorrowlaw.com.
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