By: William L. Bricker, Jr.
FinCEN Corporate Transparency Act (“CTA”) reporting was reinstituted by a decision of the Federal Court of Appeals for the Fifth Circuit on December 23, 2024.[1] Within hours of the Court of Appeals decision, FinCEN announced that most reporting entities and individuals must now report by January 13, 2025, some 3 weeks after the decision and one week before January 20, 2025, Inauguration Day.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas, issued an order granting a nationwide preliminary injunction for FinCEN CTA reporting in the Texas Top Cop Shop, Inc. v. Garland case.[2] The decision explicitly enjoined the CTA nationwide, finding that “[a] nationwide injunction is appropriate in this case” with the result that “[existing] reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline.” Consequently, FinCEN could not enforce any of the CTA’s penalties for willful noncompliance against entities or individuals.
On December 23, 2024, the United States Circuit Court for the Fifth Circuit granted a stay of the Texas Top Cop Shop, Inc. v. Garland preliminary injunction enjoining the Corporate Transparency Act (CTA) pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s Garland order.
Subject to additional actions on the administrative or judicial front, most existing reporting entities and individuals must report by January 13, 2025. Additional actions could include:
A request that the entire Fifth Circuit sitting en banc reconsider the decision of the 3-judge panel, especially since the 3-judge panel did not decide the underlying CTA issues.
There is still an appeal of a lower court decision pending before the Court of Appeals for the Eleventh Circuit.[3] Particularly, a contrary decision by that Eleventh Circuit could result in the United States Supreme Court agreeing to consider the matter and enjoining the enforcement of the CTA pending its review.
An effort to have the incoming Trump Administration address the issue.
[1] Order filed December 23, 2024, in Texas Top Cop Shop, Inc. et al. v. Garland, et al., No. 24-40792, p. 7 n 7 (5th Circuit)
[2] Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex). While a District Court in Alabama reached a decision similar to that of the Texas District Court, the U.S. District Courts for the Eastern District of Virginia and the District of Oregon reached contrary decisions—that the CTA is constitutional. For that reason, the Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024, and separately sought a stay of the injunction pending that appeal with the district court and the U.S. Court of Appeals for the Fifth Circuit
[3] National Small Business United vs, Yellen (No. 24-10736.)
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