In a surprising change of events for most small business owners: On December 26, 2024, the Fifth Circuit Court of Appeals has unpublished an Order (Order No. 24-40792) wherein the order granting the Government’s motion to stay the Texas District Court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is vacated.

The Corporate Transparency Act (CTA) was passed by the Congress and it was included therein the reporting requirement of companies created in the United States and foreign companies doing business in the United States wherein they are required to report their beneficial owners.

Eventually, business owners filed a case questioning the legality of the said law and its reporting requirements. During the pendency of the case, the District Court of Texas issued a nationwide preliminary injunction enjoining the reporting requirement of the CTA.

The government filed an appeal regarding the nationwide preliminary injunction with an emergency motion to stay the preliminary injunction issued by the District Court of Texas.

In a ruling issued by the Fifth Circuit Court of Appeals dated December 23, 2024, the preliminary injunction was lifted, and the reporting requirement was reinstated. Due to the actual and imminent deadline for the filing of BOIR, the Financial Crime Enforcement (FinCEN) recognized the urgency of the situation and announced extensions on the deadline making January 13, 2024 the earliest due date for some companies to file their Beneficial Ownership Information Report to FinCEN.In a pivotal turn of events, here comes a new order that was issued by the Fifth Circuit Court of Appeals on December 26, 2024, vacating the order granting the stay of the preliminary injunction.

In the said order, the appeal is now in the merits panel, which is still being expedited. However, to preserve the Constitutional status quo while the merits panel considers the arguments of the parties, the order granting the stay of the injunction is vacated. Hence, the reporting requirement under the CTA is currently unenforceable to companies.

The court’s decision to vacate the stay does not resolve the core issues in the case but signals the importance of preserving constitutional protections until a thorough review can occur.