Appeals Court Reinstated the Injunction on CTA Enforcement - What You Need to Know
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There has been a significant development regarding the Corporate Transparency Act (CTA) and its Beneficial Ownership Information Reporting (BOIR) requirements.
On December 26, 2024, the merits panel of the U.S. Court of Appeals for the Fifth Circuit vacated the stay of the preliminary injunction against the enforcement of the CTA, which was granted by a motions panel of the same court on December 23, 2024. This most recent decision means the nationwide preliminary injunction against the enforcement of the CTA is effective again. Until the court decides on the merits of the appeal regarding the constitutionality of the CTA, companies are not required to file beneficial ownership information with FinCEN.
What is the Corporate Transparency Act (CTA)?
The Corporate Transparency Act (CTA) is a U.S. federal law enacted as part of the Anti-Money Laundering Act of 2020, signed into law on January 1, 2021. The primary purpose of the CTA is to combat money laundering, terrorism financing, and other illicit financial activities by requiring certain businesses to report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
What does this decision mean for your business?
With the injunction reinstated on December 26, 2024, currently, non-exempt companies are not required to file their beneficial ownership information reports with FinCEN, as while the injunction is in effect, the CTA is unenforceable.
What are the reporting deadlines now?
While the injunction is in effect, the reporting deadlines below are suspended and unenforceable.
Companies created or registered before January 1, 2024:
Extended Deadline: January 13, 2025
Companies created or registered in 2024:
General rule: 90 days from receiving notice of creation or registration
Exception 1: Companies formed between September 4, 2024, and December 2, 2024, with original deadlines between December 3, 2024, and December 23, 2024 - Extended Deadline: January 13, 2025
Exception 2: Companies formed between December 3, 2024, and December 23, 2024 - Extended Deadline: 90 days (general rule) + additional 21 days
Companies created or registered on or after January 1, 2025:
Deadline: 30 days after receiving notice of creation or registration
Some companies formed in early 2024 whose 90-day deadline falls before the original deadline of January 1, 2025, are subject to the same earlier deadlines without extension.
What happens next?
The injunction will remain in effect until the court issues its ruling on the constitutionality of the CTA, following the appeal process. This decision is unlikely to come before April 2025, as oral arguments are scheduled for March 25, 2025.
CaoLaw attorneys are experts on international tax, estate planning, and wealth preservation.
