January 7, 2025

Fifth Circuit Reinstates Corporate Transparency Act Injunction After Brief Reversal, Government Files Petition for Certiorari

On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an order vacating its December 23 stay of the district court’s preliminary injunction of the Corporate Transparency Act (CTA) and the act’s Beneficial Ownership Information (BOI) reporting requirements, reinstating the pause on the January 1, 2025 compliance deadline for entity owners to file with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). Texas Top Cop Shop v. Garland, No. 24-40792; Texas Top Cop Shop v. Garland, No. 4:24-cv-00478 (E.D. Tex.).

Although the Fifth Circuit motions panel, on December 23, found that the lower court’s injunction of the CTA “inflict[ed] irreparable harm, stating, “any time a government is enjoined by a court from effectuating statutes enacted by representatives of its people, it suffers a form of irreparable injury,” the court’s merits panel, on December 26, reversed the motions panel’s stay “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments.” In accordance with its December 26 order, the Fifth Circuit has issued a briefing schedule and scheduled oral argument for March 25, 2025 in New Orleans, Louisiana.

However, on December 31, 2024, the U.S. government filed a petition for certiorari in the U.S. Supreme Court, seeking a stay of the district court’s CTA injunction, now back in effect. Merrick Garland v. Texas Top Cop Shop, No. 24-40792. A response to the petition is due from the plaintiff companies by January 10, 2025.

As of January 2, 2025, FinCEN’s Beneficial Ownership Information webpage (jpg. Jan. 6, 2025; PDF Jan. 6, 2025) lists three other district courts that have “denied requests to enjoin the CTA, ruling in favor of Treasury”—

  • Small Business Association of Michigan v. Yellen, No. 1:24-cv-314 (W.D. Mich.),
  • Firestone v. Yellen, No. 3:24-cv-01034 (D. Or.), and
  • Community Associations Institute v. Yellen, No. 1:24-cv-01597 (E.D. Va.)

—and states, “The government continues to believe—consistent with the orders issued by the U.S. District Courts for the District of Oregon and the Eastern District of Virginia—that the CTA is constitutional and will continue defending the law as necessary.”

Additionally, FinCEN states, “As of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. is once again in effect. FinCEN is complying with—and will continue to comply with—the district court’s order for as long as it remains in effect. As a result, reporting companies are not currently required to file beneficial ownership information with FinCEN.”

FinCEN notes, however, that “[r]eporting companies may continue to voluntarily submit beneficial ownership information reports.”

See also the following articles from the National Agricultural Law Center (NALC) and NALC partner centers:

 

Author:
Audry Thompson, Staff Attorney