A Fifth Circuit panel has reinstated a nationwide injunction blocking enforcement of the Corporate Transparency Act (CTA), adding to compliance uncertainties. The move comes just days after a separate panel lifted the injunction, leaving businesses scrambling to navigate the shifting legal landscape.
The CTA, designed to combat money laundering, mandates that U.S. entities formed before 2024 disclose their beneficial owners by January 1, 2025. A lawsuit filed by Texas Top Cop Shop Inc., represented by the Center for Individual Rights, led a district court to halt the law’s enforcement on December 3. However, the Fifth Circuit’s motions panel temporarily overturned the injunction on December 23, citing the government’s likelihood of defending the law’s constitutionality.
Now, a different panel within the Fifth Circuit has vacated that decision, restoring the injunction “to preserve the constitutional status quo” while it reviews the broader merits of the case. Considering the lack of certainty and confidence that the matter will be resolved by the court system anytime soon, businesses are strongly encouraged to comply with the CTA's reporting requirements and file timely in accordance with the recently adjusted deadlines in order to ensure against any potential penalties.
The HoganTaylor Tax Practice
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