Federal Government Appeals Suspension of Corporate Transparency Act Deadline

On December 3, 2024, the Eastern District of Texas issued a nationwide preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA), less than a month before the deadline. The ruling temporarily prohibits the Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA, pending resolution of the lawsuit.

The federal government filed a notice of appeal on December 5, 2024. FinCEN has stated that it will comply with the injunction but will continue to accept filings on a voluntary basis while the litigation is ongoing. Click here for FinCEN’s full statement.

The ruling was in response to one of several challenges to the constitutionality of the CTA. Notably, most of those challenges to date have failed. It is currently unclear whether the nationwide preliminary injunction will stand — it could be stayed, narrowed, or overturned — and a new deadline could be imposed with short notice.

Given the present uncertainty, we recommend that entities that have not yet filed continue to prepare their filings so that if the preliminary injunction is limited or overturned, resulting in a new deadline being imposed on short notice, they are prepared to file. As FinCEN noted, entities may file notwithstanding the injunction if they choose to do so, and entities may wish to complete the filing so that they do not need to monitor the situation.

Separately from the preliminary injunction, which is a temporary suspension of enforcement of the requirement to file, resolution of the primary court case could take time.

Note: if you file or have already filed, and the law is ultimately found unconstitutional or otherwise overturned or rescinded, you will have no further obligation regarding that filing.

Entities can, of course, choose not to file in light of the injunction. In that case, however, be aware that in addition to the potential need to file on short notice should the preliminary injunction be limited, stayed, or overturned, financial institutions may inquire as to whether the entity has filed a CTA and could require filing as part of the financial institution’s anti-money laundering program.

If you have any questions about filing, whether to file, and the potential consequences of either option, please email Kate Hamann at khamann@pierceatwood.com and our CTA Task Force will be happy to assist you.

We will continue to monitor developments.