Corporate Transparency Act (CTA) Update: A Miracle in the Fifth Circuit

On December 3, 2024, the U.S. District Court for the Eastern District of Texas entered a Memorandum Opinion and Order (the “December 3 Order”) granting a preliminary injunction enjoining the U.S. government from enforcing the Corporate Transparency Act (the “CTA”).

The CTA requires that certain corporations, LLCs, and other entities make disclosures to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) regarding beneficial ownership (defined to include at least 25% ownership or substantial control over a subject entity).  For existing companies, those disclosures would have been due by January 1, 2025; for all new companies formed after January 1, 2024, those disclosures would have been due within 90 days of formation (through December 31, 2024) and within 30 days of formation (after January 1, 2025).

In its 79-page ruling, the Court determined that the plaintiffs had met their burden for a preliminary injunction by showing a likelihood of irreparable harm (through compliance costs) and that the plaintiffs would likely succeed on the merits (because the law exceeded Congress’s enumerated powers). 

The Court implemented a nationwide injunction enjoining the CTA and its reporting deadlines.  “Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”     

This decision is one of several pending in the federal courts, including at the appellate level.  The December 3 Order is a preliminary measure, and further legal proceedings in this and other related cases may alter or impact this order.  The decision is likely to be appealed.     

Consistent with our previous guidance on the CTA, Lewis Roca will advise clients on CTA compliance only if Lewis Roca and the client have expressly agreed in writing to an engagement for that purpose.

Read our previous coverage on the CTA here.

If you have questions, please contact Scott D. DeWald, Andrew F. Dixon, Laura A. Lo Bianco, Mark D. Patton, Matthew C. Sweger, Amanda L. Thatcher, or Karen L. Witt.