Nationwide Injunction REINSTATED - Corporate Transparency Act Reporting Requirements Suspended
In yet another twist in the Texas Top Cop Shop litigation challenging the constitutionality of the Corporate Transparency Act ("CTA"), on December 26, 2024, the United States Fifth Circuit Court of Appeals (the "Fifth Circuit") reinstated the nationwide preliminary injunction blocking the government's enforcement of the CTA to preserve the constitutional status quo while the parties litigate the merits of the case. As a result of the Fifth Circuit's latest ruling, compliance with the CTA is now voluntary, and reporting companies (as defined under the CTA) are not subject to liability if they choose not to comply with the CTA's requirements.
The Fifth Circuit has set oral arguments on the merits of the litigation for March 25, 2025. Thus, absent relief from an en banc panel of the Fifth Circuit or from the U.S. Supreme Court, the preliminary injunction is likely to remain in effect until at least that date. If the government ultimately prevails regarding the constitutionality of the CTA or successfully obtains another stay of the injunction, reporting companies may again be required to comply with the CTA. Accordingly, reporting companies should continue to closely follow this ongoing litigation and other legal developments regarding the CTA and be prepared to file their beneficial ownership information reports quickly if required to do so.
Smith Anderson will continue to monitor developments in this area and will provide updates as they become available. As always, if you have any questions regarding the CTA, please do not hesitate to contact a member of the Corporate & Transactional group or your regular Smith Anderson lawyer.
Prior CTA Client Alerts:
- Nationwide Injunction LIFTED – Corporate Transparency Act Reporting Requirements Reinstated, December 24, 2024
- Nationwide Injunction Issued Against Corporate Transparency Act, December 4, 2024
- The Corporate Transparency Act: Extensions of Reporting Deadlines to Victims of Recent Natural Disasters, November 21, 2024
- The Corporate Transparency Act – New Guidance on Reporting Obligations, August 12, 2024
- The Corporate Transparency Act – Case Law Update and Determining Beneficial Owners, April 23, 2024
- Corporate Transparency Act: What You Need to Do Now, January 30, 2024
- Corporate Transparency Act: Preparing for FinCEN's Comprehensive Beneficial Ownership Reporting Requirements, September 7, 2023
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