On December 3, 2024, we reported to you that a U.S. District Court in Texas stayed the Corporate Transparency Act filing requirements. Earlier today, on December 23, 2024, the United States Court of Appeals for the Fifth Circuit issued an Order (No. 24-40792) granted an appeal by the U.S. Government of the Financial Crimes Enforcement Network and certain other U.S. Federal Government parties for a stay pending appeal of the District Court’s Preliminary Injunction. The underlying case seeks to invalidate the Corporate Transparency Act (the “CTA”) and the requirement for Reporting Companies to report Beneficial Owners (the “Reporting Rule”) to the Financial Crimes Enforcement Network based on various constitutional claims.
Based on the Court of Appeals’ order, the government can once again enforce the CTA and Reporting Rule and the requirement to report Beneficial Owners of Reporting Companies that existed prior to January 1, 2024, by January 1, 2025. It is not yet known whether FinCEN will seek to enforce the January 1, 2025, deadline and they are likely to provide additional guidance in the coming days. Given the uncertainty around enforcement, we recommend that all Reporting Companies comply to the greatest extent possible, despite the enormous burden that may impose on some organizations.
We do not know when this case will ultimately be decided, and once decided if it will be appealed, but for now, we recommend that you immediately prepare to make any required Beneficial Owner filings with FinCEN. We will continue to make you aware of impactful decisions and deadlines as the situation evolves.
Sincerely,
Kudman Trachten Aloe Posner LLP
