Corporate Transparency Act Blocked Again

Banking & Financial Institutions Capital Markets

On December 26, 2024, a merits panel of the United States Court of Appeals for the Fifth Circuit blocked enforcement of the Corporate Transparency Act (the “CTA”) until such time as the court has considered substantive arguments on the matter. This is a reversal of the December 23, 2024 ruling by a motions panel of the Fifth Circuit that reinstated the CTA.

The following is a summary of the multiple court rulings affecting the CTA in December 2024:

• December 3: A federal district court entered an order enjoining enforcement of the CTA nationwide. The government appealed to the United States Court of Appeals for the Fifth Circuit.
• December 23: A motions panel of the Fifth Circuit ruled in favor of the government and stayed the district court’s preliminary injunction, thus reinstating the CTA and its January 1 deadline. The Financial Crimes Enforcement Network (“FinCEN”) extended the deadlines in response, generally to January 13, 2025, but dependent on the date of formation of the reporting company.
• December 26: A merits panel of the Fifth Circuit vacated the order of the motions panel and reinstated the preliminary injunction, once again blocking enforcement of the CTA pending the outcome of the government’s appeal.

What does this mean for reporting companies?

Following the December 26 ruling, FinCEN issued guidance stating that reporting companies are not currently required to file beneficial ownership reports and are not subject to liability if they fail to do so while the order remains in force. Reporting companies may continue to voluntarily submit beneficial ownership reports.

Entities that have already filed their reports do not need to do anything. Entities that have not filed and do not wish to file voluntarily should be prepared to file on short notice.

Jonathan A. Greene is co-leader of the Banking & Financial Institutions practice group of Wyrick Robbins, and is also a member of the firm’s Capital Markets practice group.

Wyrick Robbins publishes Client Alerts periodically as a service to clients and friends. The purpose of this Client Alert is to provide general information, and it is not intended to provide, and should not be relied upon as, legal advice.