Beneficial Ownership Information Report – SNAFU On Hold Again (December 27, 2024)

Beneficial Ownership Information Report – SNAFU On Hold Again (December 27, 2024)

December 28, 2024

To our Clients and Friends:

SNAFU: Beneficial Ownership Information Report – On Hold Again

One of the possibilities we mentioned in a previous update was that the preliminary injunction issued by Judge Mazzant could be stayed by the appellate court.

That happened on December 23, 2024[1]:

However, just three days later the United States Court of Appeals for the Fifth Circuit issued this highly unusual order:

The Government appealed, and on December 23, 2024, a motions panel of this court granted the government’s emergency motion for a stay pending appeal. Texas Top Cop Shop, Inc. v. Garland, No. 24-40792, 2024 WL 5203138 (5th Cir. Dec. 23, 2024) The order also expedited the appeal to the next available oral argument panel.

The merits panel now has the appeal, which remains expedited, and a briefing schedule will issue forthwith. However, in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED[2]

 

On Friday evening, the US Treasury Department issued a statement acknowledging the stay being put back in place and noted we are back to voluntary compliance:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.[3]

So, for now, no one is required to comply with that portion of the Corporate Transparency Act that requires providing information relating to the beneficial ownership of covered business entities, but you can if you want.

The Fifth Circuit has set February 28, 2025 as the date for the U.S. government’s reply brief to be filed in respect of its appeal of Judge Mazzant’s preliminary injunction, suggesting that the earliest decision on the merits from the Fifth Circuit could be as early as March 2025 and in any event in the Spring of 2025.

We will continue to monitor this situation and provide additional updates as the situation warrants.

For further information or any questions on this issue, please contact Marvin Miller (miller@cmxlaw.com), Head of our Finance and Banking Practice Group.

 

Crath Miller & Xistris LLP

Offices: New York

For further information, please contact us at info@cmxlaw.com.

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[1] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex.)(Dec. 23, 2024)

[2] Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-00478 (E.D. Tex.)(Dec. 26, 2024) (emphasis added).

[3] Fincen Alert [December 27, 2024]: Impact of Ongoing Litigation – Deadline Stay – Voluntary Submission Only