Dear Client:
In an unexpected development, on December 26, 2024, the Fifth Circuit issued an Order vacating its December 23 decision to lift the initial stay on BOI reporting requirements. This vacatur enjoins the Federal Government from enforcing the CTA and stays the Reporting Rule deadline (which had been revised by FinCEN to January 13, 2025), pending an expedited appeal to the merits panel of the Fifth Circuit. As such, filing requirements under the CTA are back on hold.
We previously reported to you that on December 3rd a U.S. District Court in Texas enjoined the Government from enforcing the Corporate Transparency Act (“CTA”) and stayed the requirement for Reporting Companies to report Beneficial Owners (the “Reporting Rule”) to the Financial Crimes Enforcement Network (“FinCEN”). Then, on December 23, 2024, we advised that the United States Court of Appeals for the Fifth Circuit issued an Order that granted an appeal by the FinCEN and certain other U.S. Federal Government parties for a stay pending appeal of the District Court’s Preliminary Injunction.
Given the uncertainty around the court’s actions, and that this quickly developing matter is on expedited appeal, it is recommended that Reporting Companies position themselves to comply with the CTA and Reporting Rule within a short period of time if the injunction and stay are lifted again. A more conservative approach would be to optionally make the (currently not legally) required filings with FinCEN notwithstanding the court’s Order. We will continue to make you aware of impactful decisions and deadlines as the situation evolves.
Sincerely,
Kudman Trachten Aloe Posner LLP
