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Corporate Transparency Act (“CTA”) Alert: Key Updates and Compliance Considerations

CTA Reporting Made Voluntary Again - for the Present - by Appeals Court; Vigilant Action Remains Necessary

Fort Lauderdale, Fla. (December 31, 2024) - Recent legal developments have profoundly affected the Corporate Transparency Act (“CTA”). In light of these changes, we provide this focused update on compliance expectations resulting from the latest court rulings. This alert provides a concise overview of the current status of the CTA, including recent court decisions, FinCEN’ response, and compliance considerations for businesses.

A Lewis Brisbois legal alert on the previous December CTA updates is available here.

​A. Judicial Developments and Compliance Status

  1. Judicial Reversals and Implications: On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit temporarily reinstated the CTA’s enforcement deadline by lifting a prior nationwide injunction. However, just days later, on December 26, 2024, a subsequent order vacated this stay, returning the CTA to voluntary compliance for the time being.
     
  2. FinCEN’s Response to Court Orders: In response to the initial reinstatement, FinCEN had extended the compliance deadlines, shifting the reporting deadline for existing entities from January 1, 2025, to January 13, 2025. However, this extension is now moot. This rapid sequence of events highlights the volatile nature of the CTA’s legal landscape and underscores the need for continued vigilance

​B. Compliance Guidance Under Current Conditions

Given the current suspension of mandatory reporting requirements, FinCEN is encouraging reporting companies to comply voluntarily. Entities can prepare and submit ownership information now without facing penalties for non-compliance. Reporting companies may well find it prudent to take advantage of this opportunity to gather the necessary information and prepare their filings. We note that the situation remains fluid; the court could suddenly shift its approach (as shown last week), which would necessitate the need for reporting companies to rapidly comply with the CTA.

​C. Anticipated Developments and Legal Timeline

The Fifth Circuit has scheduled oral arguments for March 2025 in the case Texas Top Cop Shop, Inc. v. Garland. This hearing may provide critical guidance on the future of the CTA, and hopefully the court will rule quickly. However, further challenges and appeals are possible. Entities should remain vigilant and be prepared to act quickly if beneficial ownership reporting requirements are reinstated.

​D. Conclusion

The startling, eleventh-hour reversals in judicial review of the CTA’s reporting obligations so far should give any business pause, given the volatility of this complex regulatory situation. Our dedicated CTA team is working with clients on all appropriate actions for protecting their companies’ interests.

Please contact any member of our team directly to help safeguard your business interests on CTA compliance matters. Visit our Corporate Practice page to learn more about our capabilities in this area. 

Author:

Soo Jin Isicoff, Associate

Editors:

Jane C. Luxton, Managing Partner - Washington, D.C.

Jeffrey Weinstock, Partner

Andrew Zuckerman, Associate

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