On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case Texas Top Cop Shop, Inc. v. Garland, temporarily halting the enforcement of the CTA and its beneficial ownership reporting obligations. The court also suspended all related compliance deadlines.

Then, on December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit reversed the injunction, ordering that reporting companies must once again submit their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Companies were given a new, extended deadline of January 13, 2025, to file their reports.

This development was short-lived. On December 26, 2024, the Fifth Circuit vacated its order to stay the injunction, meaning companies were no longer required to submit beneficial ownership reports while the Court continued to consider the merits of the case.

In a further reversal, on January 23, 2025, the U.S. Supreme Court intervened, issuing a stay on the injunction (24A653 McHenry v. Texas Top Cop Shop, Inc. (01/23/2025).

However, on January 7, 2025, a separate nationwide injunction was issued in the case of Smith v. United States Department of the Treasury, also pending in the Eastern District of Texas, further blocking the enforcement of the CTA’s beneficial ownership information (BOI) reporting requirements. This means that, despite the Supreme Court’s recent ruling, the BOI reporting obligations remain unenforceable for now. FinCEN has clarified on its website that “[r]eporting companies […] are not subject to liability if they fail to file [beneficial ownership] information while the Smith order remains in force.”

We continue to monitor the ongoing litigation closely. For the time being, the filing of BOI reports remains voluntary.

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In Miami, attorneys Emma Rodgers and Katharine Rodriguez-Wilson joined WSHC+B’s Real Estate practice, and Pooja Patel joined the firm’s Labor and Employment practice. Rodgers and Rodriguez-Wilson are graduates of the University of Miami School of Law. Patel earned her Juris Doctor from Florida International University College of Law.

Rodgers, a former clerk at WSHC+B, is versed in business and commercial real estate transactions, drafting land use documents for local municipalities, and negotiating entertainment service contracts. Rodriguez-Wilson’s practice focuses on real estate transactions and public financing for multifamily developments. Patel works with public and private sector employers to analyze their compliance with labor and employment laws and to help mitigate potential future legal problems.

In Fort Lauderdale, attorney Michael Weitzner brings experience in business transactions and litigation. Before joining WSHC+B, Weitzner worked for a community association law firm specializing in transactional and litigation services. While there, the University of Miami School of Law graduate litigated various cases for plaintiffs and defendants, including property damage, premises liability, breach of contract, and enforcement actions.

WSHC+B also welcomed the arrival of Human Resources Consultant Sharon Kelley at its Boca Raton office.

Kelley has vast public and private sector experience in labor relations and human resources. She has worked with local governments, federal agencies, and educational institutions in the public sector. On the private side, Kelley has worked in various industries, such as transportation, manufacturing, insurance defense, and corrections/detention industries. Throughout her career, Kelley has proven herself a skilled negotiator, successfully handling collective bargaining agreements, arbitrations, and settlements.

“We are fortunate to close out the year with the arrival of these talented attorneys and professionals,” Firm Managing Director Mitch Burnstein said. “Emma, Katharine, Pooja and Michael bolster multiple practice areas of our firm, and we are eager to leverage Sharon’s wisdom, experience and abilities in this newly created role.”

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On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in the case of Texas Top Cop Shop, Inc. v. Garland, temporarily halting the enforcement of the CTA and its beneficial ownership reporting requirements. The court also stayed all deadlines for compliance.

On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit issued an order staying the injunction. As a result, reporting companies were once again required to submit beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Most companies were required to file by a new, extended deadline of January 13, 2025.

The renewed reporting requirement was short-lived, though, because in yet another turn of events, on December 26, 2024, the same appellate court vacated its stay of the injunction. Accordingly, reporting companies under the CTA are no longer required to file a BOI report while the Court debates the merits of the case. 

Given this continued uncertainty, reporting companies should make a determination as to whether to submit their BOI report voluntarily or await an appellate decision on the injunction. For those companies that decide to wait, completing the analysis to identify their beneficial owners under the CTA may facilitate filing in the event enforcement of the law is reinstated. This is an extremely fluid situation. If you decide not to file, you need to make sure that you are closely following the decisions rendered in the Texas Top Cop Shop case.

For those reporting companies that choose to file voluntarily or need assistance in determining their beneficial owners, our Firm remains ready to assist them in navigating the process and ensuring compliance with the requirements.

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In response, FinCEN issued guidance stating that, while the injunction is in effect, businesses are not required to file their beneficial ownership information. The court also stayed all deadlines for compliance. However, FinCEN also clarified that companies may still voluntarily submit their reports during this time. This guidance ensures businesses are clear on their obligations during the ongoing litigation.

The Department of Justice filed a Notice of Appeal on December 5, 2024, challenging the injunction. While several district courts have upheld the CTA’s constitutionality, including those in Virginia and Oregon, FinCEN will comply with the injunction as long as it remains in effect. Therefore, businesses are not required to submit beneficial ownership reports and will not face penalties for non-compliance during this time, though they may still voluntarily submit the reports.

Given this uncertainty, reporting companies should make a determination as to whether to submit their BOI report voluntarily or await an appellate decision on the injunction. For those companies that decide to wait, completing the analysis to identify their beneficial owners under the CTA may facilitate filing in the event enforcement of the law is reinstated. 

For those reporting companies that choose to file voluntarily or need assistance in determining their beneficial owners, our Firm remains ready to assist them in navigating the process and ensuring compliance with the requirements.

The post Client Alert: Corporate Transparency Act Litigation Update appeared first on Weiss Serota Helfman Cole + Bierman.