On December 26, 2024, the Fifth Circuit Court of Appeals issued an unsigned order that once again pauses the federal government’s ability to enforce the Corporate Transparency Act (CTA) and its “Reporting Rule.” As we have previously explained, that rule requires the vast majority of privately held entities in the United States to report detailed information about their “beneficial owners” (BOI Report) to the Financial Crimes Enforcement Network. The rule was initially blocked by a Texas federal district court on December 3, 2024, but on December 23, 2024 a three-judge panel of the Fifth Circuit reversed the district court’s ruling and temporarily allowed the CTA and Reporting Rule to move forward. The December 26th order was issued by a different panel of judges, who restored the district court’s ruling while they consider the government’s emergency appeal.
The Fifth Circuit’s decisions arise from a lawsuit brought by several Texas companies and a national business trade group, which raised multiple constitutional challenges to the CTA’s Reporting Rule. The most recent order, Texas Top Cop Shop v. Garland, No. 24-40792 (5th Cir. Dec. 26, 2024), does not give any substantive reasons for the decision to reverse the previous panel, except to “preserve the constitutional status quo” while the appeal is pending. Although it is not clear how long this current pause will remain in effect, the court noted that the government’s appeal “remains expedited.”
As a result of the December 26 order, entities do not need to file their BOI Reports until further action from the Fifth Circuit or the U.S. Supreme Court. If your entity has already filed a BOI Report, then no further action is required.
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at [email protected].