Latest update: On December 26, 2024, the 5th Circuit Court of Appeals reinstated the nationwide injunction previously issued by a U.S. District Court in Texas, once again halting enforcement of reporting obligations for millions of companies under the Corporate Transparency Act. For more details, check out our most recent update here and stay informed through our CTA resource hub.

On December 23, 2024, the 5^th Circuit Court of Appeals lifted a nationwide injunction previously issued by a U.S. District Court in Texas, reviving reporting obligations for millions of companies under the Corporate Transparency Act.

The Corporate Transparency Act (“CTA”), which went into effect on January 1, 2024, requires “reporting companies” in the United States to disclose personal identifying information about their “beneficial owners” to the Financial Crimes Enforcement Network (“FinCEN”). The CTA is estimated to impact 32.5 million companies.

Earlier in December, a U.S. District Court in Texas issued a preliminary injunction which temporarily prevented FinCEN from enforcing the CTA’s reporting requirements. The District Court held that the CTA was likely unconstitutional and that its implementation would irreparably harm reporting companies if they were forced to comply. On December 23, the Court of Appeals disagreed, opining that the U.S. Department of Justice made a strong showing that it is likely to succeed on the merits in defending the CTA’s constitutionality.  Accordingly, the Court of Appeals lifted the District Court’s preliminary injunction.

Updated Reporting Deadlines from FinCEN

Shortly after the Court of Appeals’ ruling, FinCEN announced the following reporting deadline extensions to give reporting companies time to comply with the CTA in light of the period while the injunction was in effect:

• Reporting companies that were created or registered in the United States prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
• Reporting companies that were created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies that were created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
• Reporting companies that are created or registered in the United States on or after December 24, 2024 and on or before December 31, 2024 have 90 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
• Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.

What Happens Next?

There remain multiple pending actions challenging the CTA working their way through the courts. However, at this time the CTA’s reporting obligations are in effect so reporting companies should comply with those obligations according to the revised deadline schedule. 

Resources to Ensure Compliance

To learn more, explore our suite of resources prepared by the firm to address frequently asked questions and offer guidance on complying with the CTA. For additional support we invite you to reach out to a member of our Corporate Transparency Task Force: Morgan Herchenbach, Dan McDowell, Brad Peck, and Kristin Thompson.

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