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By: Jeffrey K. Lewis, Esq., Friday, December 27th, 2024

The Court of Appeals for the Fifth Circuit has given us another holiday surprise! The nationwide injunction on the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements is once again in effect. 

On December 23, 2024, we reported that the Court of Appeals for the Fifth Circuit had lifted a nationwide injunction on the CTA and its BOI reporting requirements. Consequently, all reporting obligations were reinstated for businesses nationwide. Following the Fifth Circuit’s decision to stay the injunction, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) extended the filing deadline for most reporting companies to January 13, 2025. We knew at the time that this would not be the last we would hear of the CTA and BOI reporting requirements, but what we did not know was how quickly another update would occur. 

On December 26th, just days after lifting the nationwide injunction, the Fifth Circuit issued another order vacating its stay, effectively reinstating the nationwide injunction and halting the BOI reporting requirements under the CTA once more. The court ruled that the order from the motions-panel granting the stay on the injunction be vacated “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments. . .”

How did the Fifth Circuit manage to both lift and later reinstate the nationwide injunction? The explanation lies in the distinct panels of judges that handle motions and appeals. One panel, the "motions-panel," reviewed the Government's "emergency motion for a stay pending appeal," while a different panel, the "merits panel," is evaluating the case based on its merits. These two panels reached differing conclusions regarding the federal district court's issuance of the preliminary injunction. The following timeline summarizes the events that have brought us to the current situation: 

  • On December 3rd, a federal district court found the CTA likely to be unconstitutional and imposed a nationwide preliminary injunction on the CTA and its BOI reporting requirements.
  • The Government appealed the decision, and a motions-panel of the Fifth Circuit considered the Government's "emergency motion for a stay [of the preliminary injunction] pending appeal." On December 23rd, the panel sided with the Government, lifting the injunction based on the likelihood that the Government would succeed in proving the CTA's constitutionality. The panel did not address the merits of the case but solely ruled on whether the district court's injunction should remain in place.
  • The appeal is now before the merits panel of the Fifth Circuit which gave us our latest update and vacated the motions-panel’s order granting the Government’s motion to stay the district court’s preliminary injunction. Thus, the merits panel reinstated the December 3rd injunction. 

What now? 

The case is currently before the merits panel of Court of Appeals for the Fifth Circuit and has been expedited to the next available oral argument panel. We may receive another update on the status of BOI reporting and the CTA in just a few short days. While the Fifth Circuit continues to review the case, there are other federal courts considering challenges to the CTA. This case, and potentially other CTA cases, can still be brought before the Supreme Court of the United States for a final determination. 

However, as it stands, all BOI reporting requirements of the CTA have been suspended. While there is currently no obligation to meet the extended BOI reporting deadline, business owners can still voluntarily file their BOI reports with FinCEN. We will do our best to keep you up to date on any developments on BOI reporting and the CTA. 

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