As you may know, we posted an update on the pending litigation surrounding the Federal Corporate Transparency Act (“CTA”) and enforcement of the CTA by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). On December 3, 2024, a nationwide preliminary injunction was issued by the Federal District Court for the Eastern District of Texas (Texas Top Cop Shop, Inc. et al. v. Merrick Garland, Attorney General of the United States, et al. (EDTX 4:24-cv-478)). The defendants’ filed an appeal and motion seeking to lift the preliminary injunction.
On December 23, 2024, the United States Court of Appeals for the Fifth Circuit (Case No. 24-40792) issued an Order granting Appellants’ motion for a stay of the Federal District Court’s nationwide preliminary injunction, which lifted the preliminary injunction. However, on December 26, 2024, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN. FinCEN has issued an alert, on its website, stating that it will be accepting voluntary submissions only, while the nationwide preliminary injunction is in effect.
The Fifth Circuit has ordered that the appeal will be expedited to the next available oral argument panel. However, the Fifth Circuit’s decision does not decide on the constitutionality of the CTA, which is still pending before the District Court for the Eastern District of Texas. We will provide further updates on these cases when available.
The federal litigation cases do not affect any similar state corporate transparency laws. New York’s LLC Transparency Act (the “NY Act”) requires the disclosure of beneficial ownership information to the New York Department of State by limited liability companies formed under the laws of the state of New York and foreign limited liability companies authorized to do business in the state of New York. The NY Act is largely based on the CTA and currently is set to go into effect on January 1, 2026.
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