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UPDATE (Mar. 26, 2025): On Mar. 21, 2025, FinCEN issued an interim final rule that exempts U.S. entities and citizens from the beneficial ownership information reporting requirements under the CTA. Foreign reporting companies remain subject to the CTA and have a new reporting deadline of April 25, 2025. <a href="https://www.bakerlaw.com/insights/fincen-removes-us-entities-and-citizens-from-cta-reporting-rule/" target="_blank" rel="noreferrer noopener">Click here for additional information</a>.

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On Dec. 3, 2024, a federal district court in Texas issued a preliminary injunction that applied nationwide, temporarily halting the implementation of the Corporate Transparency Act (CTA).

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On Dec. 11, 2024, the U.S. government filed a motion requesting an immediate stay of that preliminary injunction, indicating it would promptly seek relief from the Fifth Circuit.

The Financial Crimes Enforcement Network (FinCEN) previously confirmed that reporting companies had no obligation to comply with the CTA “for as long as [the injunction] remains in effect.” Therefore, if the stay is granted, the Jan. 1, 2025 deadline would technically be back on, unless it is extended by the appellate court order or FinCEN. While agencies usually provide a grace period in such situations, FinCEN has yet to indicate any plans to do so.

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On Dec. 11, 2024, the U.S. government filed a <a href="https://admin.bakerlaw.com/wp-content/uploads/2024/12/12-11-Government-Motion.pdf" target="_blank" rel="noreferrer noopener">motion</a> requesting an immediate stay of the <a href="https://www.bakerlaw.com/insights/federal-district-court-issues-nationwide-cta-injunction/" target="_blank" rel="noreferrer noopener">preliminary nationwide injunction issued last week</a> by a federal district court in Texas that temporarily halted the implementation of the CTA.

The government argued it will be “irreparably harmed” absent an immediate stay because, among other reasons, (i) the injunction disrupts compliance at “a critical juncture in implementation” where the number of filings was increasing exponentially as the year-end initial filing deadline neared, and (ii) the injunction “created—and will continue to engender—widespread confusion among the public.”

The move comes as a bit of a surprise given the timing. A party seeking this relief would typically try to file its motion as soon as possible after the district court’s ruling (i.e., on the same day or within just a few days after). Here, the government waited eight days to file its request. In its statement on the ruling, published on Dec. 6, 2024, FinCEN confirmed the government’s appeal but gave no indication that it would be seeking an immediate stay of the decision. Given the widespread reporting of the nationwide injunction over the past week, an immediate stay at this stage would seem to risk only compounding the current public confusion.

The motion also stated that the government would seek relief from the Fifth Circuit if the district court did not issue a ruling within one or two days after its motion.

On Dec. 12, 2024, the district court issued an <a href="https://admin.bakerlaw.com/wp-content/uploads/2024/12/12-12-Order-for-Response.pdf" target="_blank" rel="noreferrer noopener">order</a> declining to rule on the government’s motion within that requested timeline. The court reasoned that it must give the plaintiffs a reasonable opportunity to respond to the motion and ordered the plaintiffs to submit their response by noon CT on Monday, Dec. 16, 2024. In addition, the court noted that the government’s motion appeared to seek emergency relief but that it failed to meet several of the procedural requirements of an “emergency motion.”

The district court will likely deny the government’s motion to stay the injunction early next week, perhaps by late Monday or Tuesday.

The government indicated that it intends to file a similar motion with the Fifth Circuit today (Dec. 13, 2024).

Once a motion is in front of the Fifth Circuit, there is no clear timetable for a decision.

If the stay is granted, the Jan. 1 deadline would technically be back on, unless it is extended by the appellate court order or FinCEN. However, agencies usually provide a grace period in such situations.

If the Fifth Circuit denies the stay, the government would either continue with the original appeal or seek relief from the Supreme Court.

The government seeking an immediate stay of the request without providing any assurance that the deadline would be equitably tolled creates at least some risk that the injunction could be lifted with little to no grace period. Accordingly, we would generally recommend that reporting companies at least be prepared to file quickly in the event that happens. Reporting companies may also voluntarily file at any time if that is their preference.

We will continue to provide updates regarding any further developments as they arise.

FinCEN Seeks Immediate Stay of Nationwide CTA Injunction

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