Enforcement of US Corporate Transparency Act Blocked Again Following Court Reversal
A Fifth Circuit panel reinstated a nationwide injunction against the Corporate Transparency Act (CTA) just three days after another panel lifted it, causing additional confusion concerning compliance with the controversial law.
- On December 26, the Fifth Circuit unexpectedly vacated the stay, anticipating an expedited ruling on the merits of the preliminary injunction. FinCEN is complying with the injunction while still accepting voluntary filings during the ongoing litigation.
"In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports," reads a statement on the agency's website.
- The Corporate Transparency Act (CTA), aimed at combating money laundering, required U.S. entities formed before 2024 to disclose their beneficial owners. This included providing full legal names, home addresses, birth dates, photo identification, taxpayer identification numbers, and other pertinent business information by January 13, 2025.
- Prior to the injunction, around 32.6 million existing U.S. businesses were expected to file reports by 2025, according to FinCEN. The agency had been warning small businesses that failing to comply could lead to penalties of up to $591 per day, as well as potential criminal charges carrying sentences of up to two years in prison and fines up to $10,000, as reported by the U.S. Chamber of Commerce.
- However, with the injunction reinstated, the government can no longer compel businesses to submit their beneficial ownership information to FinCEN, at least for the time being.
"In light of ongoing uncertainty, we recommend that entities that have not yet filed be prepared to file on short notice if the preliminary injunction is once again stayed or overturned, resulting in the January 13 deadline being reinstated or a new deadline being imposed on short notice," writes National Law Review.
Court Filing
National Law Review / Article
Bloomberg Article / Archive
Forbes Article / Archive
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