On December , 2024 we posted DOJ Files an Appeal of The Nationwide Injunction Against CTA - What To Do? where we discussed that the government filed its notice of appeal of the decision of the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop Inc. v. Garland on December 5, 2024 and now according to the ABA Banking Journal, the U.S. Court of Appeals for the Fifth Circuit on Monday December 23, 2024 reinstated the enforceability of the Corporate Transparency Act and lifted the nationwide injunction issued by the district court judge earlier this month. In so doing, the court reinstated the Jan. 1, 2025, compliance deadline for most covered businesses to report their beneficial ownership information to the Financial Crimes Enforcement Network as required by the CTA.
However, due to the period when the preliminary injunction was in effect, FinCEN delayed to Jan. 13 the deadline for most businesses to file their initial beneficial ownership information. Businesses created or registered on or after Dec. 3, 2025, will have an additional 21 days from their deadline to file. Deadlines for companies created or registered on or after Jan. 1, 2025, are unchanged. (Banks are exempt from filing, but many of their business clients are covered.)
The lawsuit in Texas was filed by the National Federation of Independent Business and several of its members. The plaintiffs argued that the CTA exceeded Congress’ authority to regulate interstate commerce, that it violates the First Amendment by compelling speech and infringing freedom of association and that it violates the Fourth Amendment by forcing the disclosure of private information.
The appeals court said the U.S. Department of Justice “made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality,” noting that the reporting requirement fell within Congress’ broad authority under the U.S. Constitution’s Commerce Clause to regulate economic activity that would affect interstate commerce.
Still exempt from the filing deadlines are members of the National Small Business Association, in which an injunction applying to its members in a separate lawsuit remains in place. The plaintiffs in the NFIB case could seek further review from the Fifth Circuit or seek relief from the U.S. Supreme Court. Several other federal courts are actively considering CTA challenges.
According to recent poll data from Wolters Kluwer, as of mid-November, only about a quarter of the estimated 32.5 million covered businesses had registered. Thirty-seven percent of firms were waiting until closer to the deadline and 12% said they had insufficient resources to do the filing. Meanwhile, 9% of businesses believed they were not covered by the rule, and 32% were unsure whether the rule applied to them.
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