The legal landscape surrounding the Corporate Transparency Act has descended into something approaching chaos. In the span of a few weeks in late 2024, a federal district court in Texas issued a nationwide injunction blocking enforcement of the CTA, the Fifth Circuit granted an emergency stay of that injunction (reinstating the filing obligation), and then a different panel of the Fifth Circuit reinstated the injunction (suspending the obligation again). For the millions of businesses subject to the CTA's beneficial ownership reporting requirements, the whiplash has been extraordinary.[1]
The Texas District Court Injunction
On December 3, 2024, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, blocking the government from enforcing the Corporate Transparency Act and its implementing regulations. Unlike the earlier Alabama decision in National Small Business United v. Yellen, which applied only to the specific plaintiffs, the Texas court's injunction was nationwide in scope — meaning it purported to relieve all reporting companies of their obligation to file beneficial ownership information reports.[2]
The district court found that the plaintiffs were likely to succeed on the merits of their constitutional challenge, concluding that the CTA exceeded Congress's enumerated powers. The court also found that the January 1, 2025, filing deadline for existing companies created irreparable harm, as businesses that failed to file faced significant civil and criminal penalties.
The Fifth Circuit's Conflicting Rulings
The government immediately sought an emergency stay of the injunction from the Fifth Circuit. On December 23, 2024, a motions panel of the Fifth Circuit granted the stay, effectively lifting the injunction and reinstating the CTA's filing requirements. FinCEN responded by extending the filing deadline for most existing companies to January 13, 2025, to account for the period during which the injunction was in effect.
Three days later, on December 26, 2024, the merits panel assigned to the underlying appeal reinstated the district court's injunction, once again suspending the CTA's filing requirements nationwide. This reversal — stay granted, then injunction reinstated within the same week — left businesses, accountants, and attorneys scrambling to determine the current state of the law.[3]
The Current State of Play
As of the date of this post, the nationwide injunction remains in effect, and FinCEN is not enforcing the CTA's filing requirements. However, this situation could change at any time — the government has sought further appellate review, and the case is moving through the courts rapidly. Multiple other CTA challenges are pending in different circuits, and the possibility of a Supreme Court decision on the merits is real.
Practical Advice for Businesses
Despite the current injunction, our advice to clients remains the same: prepare to file, and file when the legal landscape permits it. The injunction could be lifted at any time, potentially with a short compliance window. Businesses that have already gathered their beneficial ownership information and prepared their reports will be in a much better position to comply quickly if and when the filing obligation is reinstated.[4]
For businesses that have already filed, the reports remain on file with FinCEN and do not need to be withdrawn or amended based on the injunction. For businesses that were in the process of filing when the injunction was issued, the prudent course is to complete the preparation and hold the report ready for submission.
The underlying constitutional question — whether Congress has the power to require businesses to disclose their beneficial owners to a federal database — will ultimately be resolved by the courts. In the meantime, business owners should treat the CTA as a compliance obligation that is temporarily suspended rather than permanently eliminated, and should continue to plan and budget accordingly.