On December 23, 2024, the Fifth Circuit Court of Appeals lifted an injunction and reinstated the January 2025 deadline by which most companies must report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA). Shortly after the Fifth Circuit granted the government's request to stay the injunction, FinCEN announced that it was extending the reporting deadline for most companies by just under two weeks, from January 1, 2025, to January 13, 2025.

The last three weeks have created whiplash for millions of reporting companies that have not yet reported their beneficial ownership to FinCEN. As we previously reported, on December 3, 2024, in Texas Top Cop Shop, Inc., et al v. Merrick Garland, a U.S. district court in Texas issued a nationwide injunction of the CTA reporting deadline. The government appealed to the Fifth Circuit, seeking a stay of the injunction and an expedited appeal.

In its December 23 ruling, the Fifth Circuit said that "the government has made a strong showing that it is likely to succeed on the merits in defending CTA's constitutionality," finding that ownership and operation of businesses "are part of an economic class of activities that have substantial effect on interstate commerce" and fall within "more than a century of the Supreme Court's Commerce Clause jurisprudence." The court also said that a last-minute injunction of a statute passed by Congress necessarily inflicts irreparable harm on the government and that the balance of the equities favored lifting the stay. The court not only lifted the nationwide injunction but also lifted the injunction as to the individual plaintiffs in Texas Top Cop Shop, meaning that without further action from a court before January 13, 2025, even the plaintiffs in that case will have to report while the case proceeds. 

Challenges to the CTA are proceeding in federal courts across the country and future enforcement of the rule under the incoming administration is unclear. However, as a result of the Fifth Circuit's order (and FinCEN's subsequent brief extension of the deadline), the vast majority of companies affected by the CTA must report their BOI by January 13. If your company needs assistance analyzing its obligations under the CTA, our team is ready and able to assist. 

For more information, please contact:

Ian A. Herbert, iherbert@milchev.com, 202-626-1496

Ann Sultan, asultan@milchev.com, 202-626-1474

Leah Moushey, lmoushey@milchev.com, 202-626-5896

Peter Kentz, pkentz@milchev.com, 202-626-5891

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