Corporate Transparency Act Filing Requirements Paused Again Following Federal Court Ruling

The Corporate Transparency Act (CTA) filing requirements have been paused once again following a December 26, 2024, ruling by the Fifth Circuit Court of Appeals. This decision vacated a previous stay that briefly reinstated the CTA, reactivating a nationwide injunction issued earlier in the Texas Top Cop Shop, Inc. v. Garland case. Businesses are not currently required to file Beneficial Ownership Information (BOI) with FinCEN and face no liability for non-compliance while the injunction remains in effect. However, voluntary BOI filings are still accepted.

This ongoing legal battle has caused uncertainty for businesses across the U.S., but companies should remain vigilant and ready for potential enforcement changes. Learn more about the implications and how your business can navigate the shifting landscape

However, FinCEN allows businesses to voluntarily file BOI reports during this pause.

For official updates, visit FinCEN BOI Guidance.

Why the CTA Matters

The Corporate Transparency Act was enacted to combat financial crimes like money laundering, terrorist financing, and drug trafficking. By requiring businesses to disclose their beneficial ownership, the CTA aims to make it harder for bad actors to exploit corporate structures while leveling the playing field for law-abiding companies.

Despite the current pause, the government continues to defend the law’s constitutionality. Courts in Virginia and Oregon have upheld the CTA, even as the Texas-based Texas Top Cop Shop case raises broader concerns about its implementation.

Timeline of Legal Developments

1. December 3, 2024: The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, halting enforcement of the CTA.

2. December 23, 2024: A panel of the Fifth Circuit Court of Appeals stayed the injunction, reinstating BOI filing requirements.

3. December 26, 2024: A different panel of the Fifth Circuit vacated the stay, reactivating the district court’s injunction.

This back-and-forth has created confusion for many businesses, but the current ruling means that reporting requirements are once again paused.

For more on the December 23 ruling and extended deadlines, read: Corporate Transparency Act Reinstated and BOI Filing Deadlines Extended.

What Does This Mean for Businesses?

Currently, businesses are not required to comply with BOI reporting requirements, and no penalties will be enforced for non-compliance while the injunction remains in effect. However, FinCEN has clarified that businesses may voluntarily submit BOI reports during this pause.

For businesses looking to stay ahead, voluntary compliance may help prepare for the eventual reinstatement of the CTA.

For more details, read: New FinCEN Alert: Beneficial Ownership Filing Now Voluntary Amid Legal Challenges.

How MZLS LLC Can Support Your Business

Legal developments surrounding the CTA continue to evolve rapidly. At MZLS LLC, we are actively monitoring these changes to provide timely guidance to businesses nationwide. Our team can help you:

• Understand how the injunction impacts your BOI reporting obligations.

• Decide whether voluntary filing is the right choice for your business.

• Stay informed about future rulings that may affect compliance.

For personalized assistance or to speak with one of our attorneys, contact us today.