UPDATE: Corporate Transparency Act – Preliminary Injunction LIFTED and Filing Deadlines EXTENDED

By: Robyn H. Drucker and David M. Levine

In a decision issued on December 23, 2024, the United States 5^th Circuit Court of Appeals granted the United States Federal Government’s emergency motion for a stay pending appeal, lifting the nationwide preliminary injunction barring enforcement of the Corporate Transparency Act (the “CTA”) and the Reporting Rule issued by the Eastern District of Texas Court in Texas Top Cop Shop, inc. et al v. Garland.  The appeal has also been expedited for oral argument.

In an alert issued December 23, 2024, FinCEN then extended certain reporting deadlines as follows:

• Reporting Companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
• Reporting Companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
• Reporting Companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
• Reporting Companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
• Reporting Companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
• As indicated in the alert titled “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)”, Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.)—namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024)—are not currently required to report their beneficial ownership information to FinCEN at this time.

Reporting Companies are therefore advised to proceed with filing BOI Reports prior to the applicable CTA deadline (as extended).

Background

As discussed in Cohen and Wolf’s prior client updates, effective as of January 1, 2024, the Corporate Transparency Act (the “CTA”) and the rules issued thereunder by the Financial Crimes Enforcement Network (“FinCEN”) required most U.S. entities and foreign entities registered to do business in the United States (“Reporting Companies”) to file reports with FinCEN (“BOI Reports”) disclosing information about the Reporting Company and its beneficial owners prior to reporting deadlines. 

On December 3, 2024, in Texas Top Cop Shop, Inc. et al. v. Garland, Judge Amos Mazzant issued a preliminary injunction, which was a temporary order barring nationwide enforcement of the CTA and the Reporting Rule. The decision specifically referenced a suspension of the filing deadline for BOI Reports for Reporting Companies in existence prior to January 1, 2024. 

The Federal Government appealed the Texas Top Cop Shop decision to the 5^th Circuit Court of Appeals and filed an emergency motion seeking a stay of the nationwide injunction pending the outcome of the appeal. The 5^th Circuit ruled on the emergency motion in favor of the Federal Government, finding that the preliminary injunction has now been lifted and expediting the appeal for oral argument.  Reporting Companies are now required to file BOI Reports on or before the reporting deadlines, as extended by the FinCEN update.

Cohen and Wolf’s Business & Corporate and Tax attorneys will continue to monitor developments concerning the CTA and will provide updates as they become available. Please do not hesitate to contact us, should you have any questions.   

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