Fifth Circuit Stays Nationwide Injunction on Enforcement of Corporate Transparency Act, Requiring Compliance; FinCEN Extends Deadline

On December 23, 2024, the U.S. Fifth Circuit Court of Appeals lifted the injunction issued by the U.S. District Court for the Eastern District of Texas on December 3, 2024 that prevented enforcement of the Corporate Transparency Act (CTA) and the Reporting Rules promulgated by the Financial Crimes Enforcement Network (FinCEN). As a result of this decision, companies are again required to comply with the CTA and Reporting Rules.

The Fifth Circuit reversed the District Court decision on the grounds that the CTA may very well be constitutional under the Commerce Clause, and stated that “the government has made a strong showing against the Businesses’ facial challenge to the CTA.”

Shortly following the issuance of the Fifth Circuit decision, FinCEN issued a statement extending the deadline for companies formed prior to 2024 to January 13, 2025. Companies that were formed on or after September 4, 2024 will also have a January 13, 2025 filing deadline instead of their original 90-day filing deadline. Any companies formed between December 3, 2024 and December 23, 2024 will have an additional 21 days from their original 90-day filing deadline to file beneficial ownership reports.

While it is still possible that the CTA will be held unconstitutional or repealed, until further notice, companies are required to comply with the CTA within the time frames specified by FinCEN.

For more details regarding this legislation, see the latest Client Alert from our Investment Funds & Advisers and Corporate lawyers – Brian Forman, Randi Mason, Tracy Sigal and Michael Wasenius.