In a surprising turn of events, the Fifth Circuit Court of Appeals has reinstated a nationwide injunction that halts the enforcement of beneficial ownership information (BOI) reporting requirements. This decision, made on Thursday, reverses an earlier order from the same court issued just days prior.

The court’s latest action aims “to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments,” according to the court’s order. This refers to the panel of judges who will ultimately decide the appeal regarding the Corporate Transparency Act (CTA).

The CTA, enforced by the Financial Crimes Enforcement Network (FinCEN), mandates that reporting companies disclose detailed information about their beneficial owners.

This legal back-and-forth began with a Texas federal district court’s injunction on December 3, 2024, in the case Texas Top Cop Shop, Inc. v. Garland. This initial ruling halted the enforcement of the CTA and its BOI reporting stipulations, effectively nullifying the January 1, 2025, deadline for existing companies to report.

The Department of Justice (DOJ) responded by appealing this injunction to the Fifth Circuit. On Monday, one panel of the Fifth Circuit decided to lift the injunction, leading to FinCEN announcing a new filing deadline of January 13, 2025, for affected reporting companies. However, this was short-lived as another panel of judges from the same court reversed that decision on Thursday.

As of the time of writing, FinCEN has not updated its BOI page with new comments following this latest development, leaving many in limbo regarding the actual deadline.

The CTA, enacted in 2021 as part of an anti-money laundering strategy, requires companies to disclose not only the identities of beneficial owners but also, for entities incorporated after January 1, 2024, the identity of “applicants” — those who file to form these entities.

What This Means for You

• Current Status: No immediate need to file BOI reports due to the reinstated injunction.
• Preparation: Continue preparing necessary documentation for potential filing if the injunction is overturned again.
• Stay Informed: Keep an eye on updates from FinCEN and legal proceedings which could alter this situation rapidly.

Stay tuned for more updates on this evolving situation. Remember, while the enforcement is paused, the legal battle over these requirements continues, and businesses should be ready to comply at a moment’s notice.

(This is Blog Post #1674)