FINCEN has responded to yesterday’s order by the Fifth Circuit, posting on their website
(https://www.fincen.gov/boi) the following (keep reading after the end of this announcement):
In light of a recent federal court order, reporting companies are not currently required to file
beneficial ownership information with FinCEN and are not subject to liability if they fail to do
so while the order remains in force. However, reporting companies may continue to
voluntarily submit beneficial ownership information reports.
The Corporate Transparency Act (CTA) plays a vital role in protecting the U.S. and
international financial systems, as well as people across the country, from illicit finance
threats like terrorist financing, drug trafficking, and money laundering. The CTA levels the
playing field for tens of millions of law-abiding small businesses across the United States
and makes it harder for bad actors to exploit loopholes in order to gain an unfair advantage.
On Tuesday, December 3, 2024, in the case of Texas Top Cop Shop, Inc., et al. v. Garland,
et al., No. 4:24-cv-00478 (E.D. Tex.), the U.S. District Court for the Eastern District of
Texas, Sherman Division, issued an order granting a nationwide preliminary injunction.
Texas Top Cop Shop is only one of several cases that have challenged the Corporate
Transparency Act (CTA) pending before courts around the country. Several district courts
have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury.
The government continues to believe—consistent with the conclusions of the U.S. District
Courts for the Eastern District of Virginia and the District of Oregon—that the CTA is
constitutional. For that reason, the Department of Justice, on behalf of the Department of
the Treasury, filed a Notice of Appeal on December 5, 2024 and separately sought of stay
of the injunction pending that appeal.
On December 23, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a
stay of the district court’s preliminary injunction entered in the case of Texas Top Cop Shop,
Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal
of the district court’s order. FinCEN immediately issued an alert notifying the public of this
ruling, and recognizing that reporting companies may have needed additional time to
comply with beneficial ownership reporting requirements, FinCEN extended reporting
deadlines. On December 26, 2024, however, a different panel of the U.S. Court of Appeals
for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a
stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction
issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting
companies are not currently required to file beneficial ownership information with FinCEN.
My understanding is that oral arguments on this case have been set for March 25, 2025.
Presumably (emphasis on the presumption part of this statement) the District Court’s
injunction and the above policy position will remain in effect at least until them.
Stay tuned.