Nationwide CTA Injunction Back in Effect

Key Takeaways

• Enforcement of the Corporate Transparency Act (CTA) has once again been put on hold, at least temporarily.
• In early December, a federal district court in Texas issued a nationwide preliminary injunction that temporarily put enforcement of the CTA on hold.
• On Dec. 23, 2024, the United States Court of Appeals for the Fifth Circuit granted an immediate stay of the nationwide injunction, which allowed the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) to resume enforcement of the CTA.
• On Dec. 26, 2024, the Fifth Circuit reversed course and reinstated the preliminary injunction, meaning that enforcement of the CTA has once again been put on hold during the appeals process.
• In light of the recent developments, reporting companies may choose to wait to file their beneficial ownership information reports while the preliminary injunction remains in effect. Given the possibility for rapid changes, reporting companies (and others affected by the CTA) should closely monitor developments and consult with their legal advisers. 
• If enforcement of the CTA resumes, it is unclear whether and how new CTA filing deadlines will be imposed, and it is possible that there may be quick deadlines to comply. The prudent approach is for reporting companies to be prepared to quickly file any required reports under the CTA in the event the injunction is lifted again.