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12.30.24   |   News

Corporate Transparency Act Update: BACK ON HOLD

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On December 26, 2024, only three days after it reinstated the Corporate Transparency Act (“CTA”), the Fifth Circuit Court has changed course and vacated its previous decision.

This means that the CTA is once again ON HOLD for the indefinite future.

The Financial Crime Enforcement Network (“FinCEN”) – the agency in charge of implementing the CTA – has returned to its previous stance that filing is voluntary while the hold is in effect.

(For a brief overview of the CTA, please see our blog post from earlier this year.)

Filing Paused, But Still Available

Critchfield has once again paused its filings, with the assumption that clients do not wish to submit their information while the law is on hold and its constitutionality remains in question.

If you have previously provided your information and we have not yet submitted it to FinCEN, we will retain it for the foreseeable future and resume filing if and when the law is reinstated.

With that saidif you would still like to register, please reach out to us. Our attorneys remain ready to assist with registration, even while the hold is in place and filing is voluntary.

A Recap of the CTA Timeline

To summarize the events so far:

January 1, 2024 – The CTA became effective. Newly formed entities had 90 days to register after formation, while new entities were required to register before the end of the year.

December 3, 2024 – The federal Court for the Eastern District of Texas issued a nationwide injunction, placing the enforcement of the CTA on hold. FinCEN announced that CTA filing would be voluntary while the hold remained in effect.

December 23, 2024 – The Fifth Circuit Court of Appeals granted an emergency motion to lift the hold on the CTA, reinstating the law until a final decision could be made on the law’s constitutionality. FinCEN announced that the new filing deadline would be January 13, 2024, for businesses formed before 2024.

December 26, 2024 – The Fifth Circuit Court vacated its earlier ruling. The CTA is placed back on hold until the Fifth Circuit reaches a final decision. FinCEN restates its earlier guidance that filing is voluntary while the law is on hold.

What Does the Future Hold?

The future of the CTA remains uncertain. The road to a final decision may be a long one, and deliberations could continue deep into 2025. The CTA may be reinstated once again (whether temporarily or permanently), but this most likely won’t occur before late March 2025 at the earliest.

The Fifth Circuit Court has expedited the case, but it remains a complex and increasingly contentious issue. Oral arguments are currently scheduled for March 25, 2025, and it is possible that the court may deliberate into early April before making a decision.

Even a decision by the Fifth Circuit may not mark the end. There are numerous appeals and other proceedings that may follow, potentially including an eventual final appeal to the United States Supreme Court. This is in addition to a shifting congressional makeup and a new incoming presidential administration whose priorities may no longer align with the CTA.

In the meantime, it is important to keep informed in case of any other unforeseen developments. Critchfield will continue to closely monitor developments and provide client alerts through www.ccj.com and our various social media channels.

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