Federal Appeals Court Rules Enforcement of the Corporate Transparency Act can Continue

December 24, 2024

On December 23, 2024, the United States Court of Appeals for the Fifth Circuit lifted the nationwide preliminary injunction blocking the federal government from enforcing the Corporate Transparency Act (“CTA” or the “Act”) (Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Tex. Dec. 3, 2024)). Shortly thereafter, the U.S. Financial Crimes Enforcement Network (“FinCEN”), the federal agency charged with enforcing the CTA, announced the reporting deadline has been extended to January 13, 2025.

The CTA, which went into effect January 1, 2024, requires non-exempt business entities to file a Beneficial Ownership Information Report (“BOI Report”) with FinCEN disclosing certain information about the beneficial owners of the company, including their names, dates of birth, residential addresses, and an image of a government-issued identification document (e.g., driver’s license or passport). Prior to the recent rulings, the CTA required companies formed or registered before January 1, 2024, to file the BOI Report by December 31, 2024. Under the Act, FinCEN is authorized to penalize companies for noncompliance with such reporting requirements.

The CTA was met with pushback and several lawsuits challenging the federal government’s authority to collect and store the requested information. Just three weeks ago, on December 3, 2024, the court in Texas Top Cop Shop, Inc., et al. v. Garland, et al., issued a nationwide preliminary injunction blocking the federal government from enforcing the CTA. The plaintiffs’ win, however, was short-lived. All eyes are now on the U.S. Supreme Court to learn whether it will hear the appeal and, if so, when.

Our team will continue to monitor this situation and share updates as they develop.

Carolyn Lavin DeVaughn is an Associate Attorney with Gross Shuman P.C. She concentrates her practice in the areas of corporate law, banking and finance, and estate planning. Carolyn works with businesses across a wide range of industries on all aspects of their business operations. She also works closely with clients on securing the funding to complete complex commercial real estate purchases, loans, and refinancing agreements. You can reach Carolyn at 716-854-4300 ext. 242 or cdevaughn@gross-shuman.com