On December 13, 2024, the Biden Department of Justice submitted an emergency motion to the U.S. Court of Appeals for the Fifth Circuit to stay the preliminary injunction issued by the U.S. District Court for the Eastern District of Texas. This injunction currently prevents the enforcement of the Corporate Transparency Act (CTA). The government has requested a ruling be rendered by December 27, 2024.
This motion aims to facilitate the implementation of the FinCEN Beneficial Ownership Information requirements prior to the commencement of the Trump Administration. President Biden has emphasized this initiative as a fundamental aspect of his strategy to mandate that businesses disclose their beneficial owners.
The Fifth Circuit has independently expedited the briefing schedule, with final responses due to the Court by December 19. Many observers anticipate that a ruling may be issued before the end of the year. Furthermore, the preliminary injunction at the District Court level remains an ongoing appeal.
The Fifth Circuit has several potential courses of action: it may deny the government for a stay, thereby upholding the injunction’s nationwide implications for the CTA, or it could grant full or partial relief to the government. Should the Fifth Circuit grant a complete stay of the preliminary injunction, the January 1, 2025 filing deadline for reporting companies in existence as of January 1, 2024, will be reinstated on a nationwide basis unless the Financial Crimes Enforcement Network (FinCEN) opts to extend that deadline. A partial stay would provide benefits solely to the involved parties.
Given the proximity of the holiday season, there is a limited timeframe for filing the required beneficial ownership information reports. All businesses must be prepared to submit their filings prior to January 1. As the Fifth decision is likely to be announced during the holiday week, there will be constrained time for temporary judicial guidance.
We are closely monitoring the developments in this case. The Fifth Circuit’s decision, expected next week, will provide critical temporary guidance on this matter.
RJC
12/17/2024
