As you probably heard, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on December 3, 2024 to stop the Federal government from enforcing the Corporate Transparency Act (the “CTA”) and the regulations implemented under the CTA. The case is called Texas Top Cop Shop, Inc. et al. v. Garland, et al. The court referred to the CTA as “quasi-Orwellian” and decided that it was “likely unconstitutional.”

It took just two days for the U.S. Department of Justice to appeal this ruling to the United States Court of Appeals for the Fifth Circuit. The Financial Crimes Enforcement Network (FinCEN), the agency charged with enforcing the CTA, issued a press release reassuring reporting companies that no action will be taken against them for failing to file their beneficial ownership information while the Texas court’s order remains in place. FinCEN did not, however, indicate whether it would provide a grace period for filing should the injunction be lifted. It noted that reporting companies may continue to voluntarily file those reports during the period that the stay is in effect. Yesterday, the Department of Justice filed a motion with the District Court to lift the injunction while the Fifth Circuit considers the appeal. If this motion is granted, reporting companies (other than the plaintiffs named in the Texas Top Cop Shop case) would be required to file their beneficial ownership reports as if the District Court injunction had never been entered.