Today, the United States Supreme Court reinstated the Corporate Transparency Act (the “CTA”) and allowed its reporting obligations to go into effect pending a challenge to the law’s merits in the U.S. Court of Appeals for the Fifth Circuit.
On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit vacated their stay of the preliminary injunction in light of the expedited ruling expected on the merits of the preliminary injunction.
As previously reported, on December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on the enforcement of the Corporate Transparency Act (the “CTA”) and its reporting obligations. On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the preliminary injunction.
As the January 1, 2025 reporting deadline for beneficial ownership information under the Corporate Transparency Act (“CTA”) quickly approaches, the United States District Court for the Eastern District of Texas (“Court”) issued a critical decision which has caused significant uncertainty.[1] On December 3, 2024, the Court issued a preliminarily injunction, temporarily blocking enforcement of the CTA and its reporting rule nationwide. The Court specifically stated “reporting companies need not comply with the CTA’s January 1, 2025, [beneficial ownership information] reporting deadline pending further order of the Court.”
On July 8, 2024, the Financial Crimes Enforcement Network (“FinCEN”) issued additional FAQs relating to the Corporate Transparency Act (the “CTA”). More specifically, FinCEN provided helpful guidance pertaining to the reporting requirements of companies created or registered on or after January 1, 2024 that later wind up their affairs and cease to exist before their initial beneficial ownership information (“BOI”) report is due to FinCEN.
On April 18, 2024, the Financial Crimes Enforcement Network (“FinCEN”) issued additional FAQs relating to the Corporate Transparency Act (the “CTA”). More specifically, FinCEN provided helpful guidance pertaining to the reporting requirements of homeowners associations (“HOAs”) and reporting companies that have ownership interest held in trusts.
On March 1, 2024, a Federal District Court in Alabama held that the Corporate Transparency Act (the “CTA”) is unconstitutional.[1] The Court reasoned that the plaintiffs were entitled to summary judgment because the CTA “exceeds the Constitution’s limits on Congress’ power.” As the Court ruled Congress exceeded its enumerated powers, the Court found it unnecessary to render a decision on the plaintiffs’ other arguments, specifically, whether or not the CTA violates the First, Fourth, and Fifth Amendments.
The Corporate Transparency Act ("CTA") reporting requirements take effect on January 1, 2024. The CTA requires many entities to disclose ownership information to the Financial Crimes Enforcement Network (“FinCEN”).
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