26° and Clear
Court Vacates Stay on Corporate Transparency Act, Temporarily Halting Reporting Requirements
Recent federal court decisions leave CTA deadlines in flux, prompting businesses to closely review compliance obligations.
In a rapidly shifting legal landscape, the Corporate Transparency Act (CTA)—which obliges most domestic and foreign companies doing business in the United States to file Beneficial Ownership Information (BOI) reports—has seen its enforcement toggled multiple times in recent days. On December 26, 2024, the U.S. Court of Appeals for the Fifth Circuit “vacated a previous stay on the nationwide injunction against enforcing the Corporate Transparency Act (CTA). This effectively halts all CTA reporting requirements temporarily.” Despite this development, the guidance remains that “Entities should still evaluate their reporting obligations and consider voluntary reporting via FinCEN’s system.”
Background and What the CTA Requires
Under the CTA, effective January 1, 2024, most corporations, limited liability companies, and similar entities “must file Beneficial Ownership Information (BOI) reports with FinCEN.” These rules apply unless an entity falls into one of 23 exemptions, such as large operating companies, banks, or registered investment companies. The U.S. government’s goal is “to combat financial crimes by making ownership structures more transparent.”
Each report must identify “individuals who own at least 25% or have substantial control” of the entity, providing “their name, birthdate, address, and an identifying document.” Reports are filed electronically through FinCEN’s website, which generates a confirmation upon successful submission.
Recent Conflicting Court Actions
On December 23, 2024, the Fifth Circuit “granted the DOJ’s emergency motion, reinstating CTA reporting requirements nationwide, effective immediately.” Following that decision, new filing deadlines were announced:
- Entities existing before January 1, 2024: Deadline extended to January 13, 2025.
- Entities with initial deadlines between December 3–23, 2024: The deadline has also been extended to January 13, 2025.
- Entities formed December 24–31, 2024: Must report within 90 days of formation.
- Entities formed on or after January 1, 2025: Have 30 days to report.
A “limited injunction applies only to specific plaintiffs in the Northern District of Alabama, including members of the National Small Business Association as of March 1, 2024.” Meanwhile, Congress “opted not to extend the reporting deadline to January 1, 2026, during its recent Continuing Resolution.”
However, just days later on December 26, 2024, the same court vacated its stay, halting the CTA requirements once again. Though the final outcome remains uncertain, authorities continue to encourage businesses to be ready: “Immediate Action Required: Reporting entities must assess their status and file beneficial ownership information (BOI) by applicable deadlines. Contact legal experts for assistance if needed.”
Implications for Local Businesses
Understanding these shifting mandates is crucial for businesses throughout New Jersey—including those in Morristown and Morris County. Entities should remain vigilant about changing legal rulings, new filing deadlines, and whether they qualify for any exemptions. While the injunctions temporarily stop enforcement, the CTA could resume quickly depending on future court decisions or additional legislative action.
To learn more, consult FinCEN’s BOI homepage, the U.S. Department of the Treasury’s Frequently Asked Questions in multiple languages, or seek legal counsel to ensure your organization is prepared to comply once the final regulations and deadlines are confirmed.
