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On December 26, 2024, the Fifth Circuit vacated the stay of a preliminary injunction against enforcement of the Corporate Transparency Act (CTA) and its Reporting Rule. This order reinstates the December 3, 2024, injunction issued by the District Court for the Eastern District of Texas in Texas Top Cop Shop, Inc. v. Garland.
Corporate Transparency Act Enforcement Halted: What It Means for Community Associations and Other Entities
PAGE AMG is closely monitoring developments regarding the Corporate Transparency Act (CTA) after the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide preliminary injunction against the enforcement of the CTA and its Reporting Rule on December 26, 2024. This decision, which vacated a previous stay, has significant implications for reporting deadlines and compliance obligations.
As a result of the Fifth Circuit’s ruling, no filings under the CTA are required at this time. This includes the initial beneficial ownership information (BOI) reports for companies formed or registered prior to 2024, which were due by January 13, 2025. Companies are not obligated to file these reports until further notice, although voluntary submissions remain permissible.
Recent Timeline of Legal Actions
Below is a summary of notable actions impacting CTA enforcement:
Dec. 3, 2024: The U.S. District Court for the Eastern District of Texas issued an order enjoining the enforcement of the CTA and its Reporting Rule.
Dec. 5, 2024: The government filed a Notice of Appeal.
Dec. 6, 2024: The Financial Crimes Enforcement Network (FinCEN) announced that reporting companies are not currently required to file BOI reports due to the court order but may do so voluntarily.
Dec. 11, 2024: The government filed a motion to stay the injunction pending appeal.
Dec. 23, 2024: A Fifth Circuit motions panel granted the government’s emergency motion to stay the district court’s injunction, expediting the appeal.
Dec. 24, 2024: Plaintiffs petitioned for an emergency rehearing en banc, urging a reversal of the stay order.
Dec. 26, 2024: The Fifth Circuit vacated the stay, reinstating the nationwide preliminary injunction against the CTA and the Reporting Rule.
Dec. 27, 2024: The Fifth Circuit issued an expedited briefing schedule, with oral arguments set for March 25, 2025.
What Does This Mean for Reporting Companies, including Community Associations?
The Fifth Circuit’s decision underscores the constitutional complexities surrounding the CTA. Compelling entities to file BOI reports before the expedited appeal’s resolution could infringe on plaintiffs’ rights and create undue prejudice. For now, reporting companies, including community associations, have a reprieve from imminent compliance obligations under the CTA.
Although the injunction halts enforcement for the time being, the situation remains fluid:
Potential Supreme Court Review: Regardless of the Fifth Circuit’s ultimate ruling, an appeal to the U.S. Supreme Court is anticipated.
Legislative Changes: The incoming administration and Congress may seek to amend or repeal the CTA as part of broader policy initiatives.
Pending Cases: Other lawsuits, such as National Small Business United v. Yellen, may influence the outcome of CTA-related enforcement.
At PAGE AMG, we understand the uncertainty surrounding the Corporate Transparency Act and its implications for businesses and community associations. We are committed to keeping our clients informed and prepared to adapt to this evolving regulatory landscape. If you have questions or need assistance navigating CTA compliance, please contact our office for personalized guidance.
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