Update: Nationwide Injunction on Corporate Transparency Act Enforcement Restored, But Legal and Legislative Battles Loom

12-31-25 Update: Last Thursday, the Fifth Circuit Court of Appeals reinstated a nationwide injunction on the CTA, temporarily halting enforcement and giving small businesses a reprieve from filing beneficial ownership reports with the Financial Crimes Enforcement Network (FinCEN).

Unfortunately, the fight over CTA will continue, likely involving the Supreme Court and Congress. A quick recap of events:

• On December 3, 2024, the U.S. District Court for the Eastern District of Texas put in place a temporary injunction until the case could be decided, halting the need for millions of business owners to report beneficial ownership information (BOI).

• On December 18, 2024, the U.S. House of Representatives defeated a continuing resolution (CR) bill that included a provision delaying enforcement for one year; eventually, a CR was passed without this provision.

• On December 23, 2024, after an appeal by FinCEN, the 5^th Circuit Court of Appeals’ motion’s panel stayed the temporary injunction. Due to the short time frame before the December 31^st deadline, FinCEN delayed the reporting deadline to January 13, 2025.

• On December 26, 2024, the merit’s panel of the 5^th Circuit upheld the injunction until the law's constitutionality is determined.

FinCEN is expected to appeal this decision to the Supreme Court before January 20, 2025, and the change of administration. Because Congress will reconvene later this week, an effort to pass the one-year delay quickly will take place because of the uproar over the uncertainty caused by the courts.

12-5-2024 Update: The U.S. District Court for the Eastern District of Texas has suspended the Corporate Transparency Act nationwide through a temporary injunction while the court works through the case. The CTA would have required all businesses founded before 2024 to file a Beneficial Ownership Information report by December 31, 2024, and any business founded in 2024 or later to file a BOI report within 30 days for face a potential felony charge. With the temporary injunction millions of small business owners will no longer face this requirement. The Biden Administration is very likely to appeal the injunction to the Fifth Circuit Court of Appeals, the means some uncertainty remains, but currently no business will be required to report BOI.

Original Post: Last week, the District Court for the Northern District of Alabama ruled the Corporate Transparency Act (CTA) violates the constitution. This is the first judicial win over the highly controversial CTA and is likely to open the act to further review. CTA required businesses to hand over sensitive business data including beneficial ownership information and hefty fines for non-compliance. The first of three rules stemming from CTA went into effect at the beginning of 2024, but the lack of information on how to comply has made it difficult for businesses to navigate.

The ruling from Judge Liles Burke currently only applies to members of the National Small Business Association, which brought the lawsuit, however with the Department of Justice likely to appeal, the next court would likely expand relief to the larger business community.