Corporate Transparency Act Blocked—Again

Millions of businesses will not have to comply with a federal law’s Jan. 1, 2025 reporting deadline following a rollercoaster month of conflicting court rulings.

On Dec. 26, a three-judge panel from the U.S. Court of Appeals for the Fifth Circuit reinstated a nationwide injunction blocking enforcement of the Corporate Transparency Act.

That decision overturned a ruling made three days earlier by a different panel of the court that lifted the preliminary injunction granted by the the U.S. District Court for the Eastern District of Texas Dec. 3.

The CTA, which took effect Jan. 1 this year, requires most companies incorporated in—or operating in the U.S.—to report stakeholder information to the U.S. Treasury Department’s Financial Crimes Enforcement Network.

The law was likely to impact approximately 32.6 million small and medium-sized businesses, with compliance costs expected to exceed $22 billion in the first year.

The Dec. 26 court decision means reporting companies are not required—for now—to file beneficial ownership information reports.

Reporting Deadlines

Under the act, covered companies formed or registered to do business prior to Jan. 1, 2024 were required to file initial FinCEN reports by Jan. 1, 2025.

Companies formed or registered during 2024 were required to comply with reporting requirements within 90 days, while companies formed or registered after Jan. 1, 2025 had 30 days to comply.

After the Dec. 23 ruling that overturned the earlier injunction, the Treasury Department quickly extended the reporting deadline to Jan. 13, 2025—however that deadline was rendered moot by the court’s Dec. 26 action.

Given the situation, reporting companies should seek legal counsel regarding compliance with the CTA.

The Fifth Circuit Court of Appeals set March 25, 2025 as the date for hearing oral arguments on the merits of the case.

Excluding an appeal to the U.S. Supreme Court or further action by the entire Fifth Circuit, that schedule should allow reporting companies some breathing room.

Given the volatility of the situation, reporting companies should seek legal counsel regarding compliance with the CTA, including consideration of confidentiality obligations if the choice is made to file with FinCEN while the injunction is in place.