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CTA Enjoined Again – What it Means for “Reporting Companies” on 12/31/2024


CTA, Corporate Transparency Act / December 31, 2024 / Gordon B. Russell and Michael Desmond

Nearly every day the courts have been open in these last two weeks of the year has been marked by a change to the reporting and enforcement requirements of the Corporate Transparency Act (“CTA”). These changes have created doubt and confusion among companies and the legal profession at large about exactly what is expected of Reporting Companies, in some cases as early as January 1, 2025. This article will briefly summarize the latest events and what Reporting Companies can expect as we move into 2025.

The ongoing litigation in the 5th circuit between Texas Top Cop Shop and the Department of Justice is not yet resolved and will likely remain active for the foreseeable future. As of this writing, the 5th circuit has upheld the preliminary injunction put in place earlier this month by the Eastern District of Texas. This came after initially staying the injunction mere days before enforcement was set to begin. The freshly restored preliminary injunction will prevent the Financial Crimes Enforcement Network (“FinCEN”), an agency of the United States Treasury, from enforcing CTA’s reporting requirements until the ongoing litigation on the merits of CTA’s constitutionality has concluded. Once the Eastern District has reached a conclusion on the constitutionality of the CTA, an appeal of the final judgment to the 5th Circuit and then the Supreme Court are all but assured. Whether SCOTUS will weigh in on CTA remains to be seen, but in any event, the news being reported today on the law is far from final.

However, the 5th circuit litigation is not the only source of change to the law and of day to day confusion. Even before the preliminary injunction was reinstated, in light of the rapid changes to legal requirements for Reporting Companies (as defined in the CTA and further expanded in FinCEN’s regulations implementing it), FinCEN had postponed the deadline for companies formed prior to 2024 to file from January 1 to January 13, 2025.

Meanwhile, in Washington, early drafts of the continuing resolution to fund the government into FY 2025 contained language further extending reporting deadlines under the CTA, which caused many following the law through the legislative process to believe that there was even more relief potentially on the horizon for Reporting Companies formed prior to 2024. Ultimately, the version of the Resolution passed by Congress and signed by President Biden did not contain any language modifying CTA. As a result if the courts ultimately uphold the constitutionality of CTA, then it will go into effect as originally enacted, subject to further efforts by FinCEN to establish new deadlines for reporting.

Key Takeaways on the Current Status of CTA:

  • A nationwide injunction is currently in effect preventing enforcement of the Corporate Transparency Act.
  • The current injunction is likely in place for as long as it takes the courts to determine whether the Corporate Transparency Act is constitutional.

If the law were upheld today, then all “Reporting Companies” as broadly defined by the CTA and more particularly defined by FinCEN currently in existence would need to file Beneficial Ownership Reports by January 13, 2025 (subject to further extension by FinCEN), and all new companies formed after January 1, 2025 would need to file their reports within 30 days of formation.

For More Information on the definition of Reporting Companies, Beneficial Ownership Reports, and CTA generally, read our prior blog posts analyzing the law below:

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