UPDATE AS OF DECEMBER 26, 2024
Corporate Transparency Act (CTA) Update
A merits panel of the United States Court of Appeals for the Fifth Circuit (“Fifth Circuit”) issued an Order vacating the Court’s December 23, 2024, Order that reignited beneficial ownership interest reporting (“BOIR”) requirements.
On December 3, 2024, a Federal Court in Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478, preliminarily blocked the CTA reporting requirements pending further order of court. However, on December 23, 2024, the federal appeals court for the Fifth Circuit lifted the injunction and expedited the government appeal to the next available oral argument panel. Fin/Cen immediately issued an alert, recognizing that reporting companies may have needed additional time to comply with the BOIR requirements.
Now, on December 26, 2024, upon expedited oral argument, a merits panel for the Fifth Circuit has issued an order “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” See the Fifth Circuit Order at Docket No. 24-40792.
Accordingly, the injunction issued on December 3, 2024, is in effect and reporting companies are not currently required to file their BOIR, pending further court action.
We will continue to monitor the CTA and its BOIR requirements. If you have questions about the ever changing CTA compliance requirements, please reach out to Attorneys Daniel P. Lynch and Eric A. Thomas at (724) 776-8000.
UPDATE AS OF DECEMBER 23, 2024
Corporate Transparency Act (CTA) Update
The United States Court of Appeals for the Fifth Circuit Lifts December 3, 2024 Injunction that blocked beneficial ownership interest reporting requirements.
On December 3, 2024, a Federal Court in Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478, preliminarily blocked the CTA reporting requirements pending further order of court. However, on December 23, 2024, the federal appeals court for the Fifth Circuit lifted the injunction and Fin/Cen provided new reporting deadlines.
Previously, any business entity created prior to January 1, 2024, was required to file its Beneficial Ownership Interest Report (“BOIR”) by December 31, 2024. Now those entities have until January 13, 2025. Entities created after September 4, 2024 had ninety (90) days from formation to file their BOIR and now have until January 13, 2025. Also, entities created on or after December 3, 2024 (initial injunction), and before December 23, 2024 (lifting of injunction), the reporting deadline is extended 21 days from their original filing due date. Entities formed on or after January 1, 2025 will have 30 days from formation to file their BOIR.
We will continue to monitor the CTA and its BOIR requirements. If you have questions about the ever changing CTA compliance requirements, please reach out to Attorneys Daniel P. Lynch and Eric A. Thomas at (724) 776-8000.
UPDATE AS OF DECEMBER 3, 2024
Breaking News for Small Business Owners
Effective December 3rd, 2024, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction, enjoining the Federal Government from enforcing the Corporate Transparency Act (“CTA”). Texas Top Cop Shop, Inc. et al. v. Garland. See the full text of the court’s opinion here.
The Court based its decision on the Commerce Clause and the Necessary and Proper Clause of the United States Constitution, finding that the CTA goes beyond Congressional authority under the 10th Amendment. Consequently, reporting companies, as defined by the CTA, do not have to file a Beneficial Ownership Information Report by the CTA’s January 1, 2025, deadline (pending further Order of Court).
We have posted three other articles providing details of the now unenforceable CTA:
- The New Corporate Transparency Act
- Is the Corporate Transparency Act Unconstitutional?
- Corporate Transparency Act Update
Please contact Daniel P. Lynch or Eric A. Thomas at The Lynch Law Group at 724-776-8000 with any questions.
UPDATE AS OF MARCH 1, 2024
Is the Corporate Transparency Act Unconstitutional?
On March 1, 2024, a U.S. District Court judge in Alabama in a fifty-three-page opinion ruled that the Corporate Transparency Act (“CTA”) is unconstitutional because it “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.” Nat’l Small Bus. United v. Yellen, 2024 U.S. Dist. LEXIS 36205 (N.D. Ala. 2024).
The Court’s decision stayed any CTA reporting requirements for the Plaintiffs in that case only. Because the Court found the CTA unconstitutional on this ground it did not address any of the other constitutional challenges.
This decision will not be the end of the matter because:
- The U.S. government is likely to appeal this decision and may seek an interim stay of the ruling from both the trial and appellate courts;
- It is possible that this ruling will inspire suits in other districts;
- FinCEN may offer comments about the impact of the ruling on CTA implementation and enforcement in the coming days;
- This case only applies in the Northern District of Alabama. It is not precedent for any other jurisdiction.
Entities currently required to file a beneficial ownership interest report shall continue to be required to do so.
The Lynch Law Group, LLC, will continue to monitor this litigation and its implications for the future of the CTA.
If you have any questions about corporate compliance, email Daniel P. Lynch dlynch@lynchlaw-group.com or Eric A. Thomas at ethomas@lynchlaw-group.com
