Fifth Circuit suspends district court CTA injunction; FinCEN extends the filing deadline to January 13, 2020

In previous notes dated December 4, 9, and 13 2024, we reported (1) that a district judge in Texas issued an injunction nationwide halting the implementation of the Corporate Transparency Act. (2) that the Financial Crimes Enforcement Network acknowledged that companies did not have to file CTA-mandated disclosures as long as the injunction was in effect. The U.S. Department of Justice then moved to stay the order pending an appeal. The district court denied the motion. However, on December 23, 2024 the United States Court of Appeals of the Fifth Circuit granted that motion. This allowed the government to stay the district court’s order and expedite the briefing of the case. The Court found that the government “made a convincing case that it will succeed in its constitutional defense of CTA.” . . Injunctions days before the deadline would be an unfair burden, as the plaintiffs had only filed their suit a few months earlier and the injunction was in place for just a few weeks. Meanwhile, businesses had had “nearly 4 years”. . . to prepare since Congress enacted the CTA, as well as the year since FinCEN announced the reporting deadline.”

FinCEN quickly responded to the Fifth Circuit ruling. CTA extended the deadlines for filing because it recognized that reporting companies might need more time to meet CTA filing requirements, given that the district courts preliminary injunction had paused CTA obligations. Certain reporting companies have received extensions because they are located in areas affected by natural disasters. The deadline for reporting companies that have received these extensions is January 13, 2025. (Of course for companies that have disaster relief deadline extensions already after January 13, 2025 they retain their original deadline.)

• Plaintiffs of National Small Business United v. Yellen No. FinCEN does not require that members of the National Small Business Association (e.g. as of March 1, 2020) report their beneficial ownership to them.

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