Appeals Court Again Reinstates CTA Injunction

On, off, and now back on, the Corporate Transparency Act injunction is again stayed

U.S. Fifth Circuit Court of Appeals reinstates the stay on enforcement of the Corporate Transparency Act. — It has been a dizzying month of on-again, off-again for the Corporate Transparency Act as the U.S. Fifth Circuit Court of Appeals reinstates the stay put in place at the beginning of the month by a federal district court that ruled the new anti-money laundering law is unconstitutional.
— Image courtesy of Wikimedia/Bryan Gottlieb for Roofing Contractor

In a significant development, a U.S. Court of Appeals for the Fifth Circuit panel has again reinstated an injunction that prevents the enforcement of the Corporate Transparency Act and its associated federal regulations. Here’s what this means for your business and how to proceed.

Key Updates on the CTA: Current Status

As of December 26, companies are not required to file Beneficial Ownership Information (BOI) reports under the CTA. This decision stems from a ruling by the Fifth Circuit’s “merits” panel, which vacated an earlier ruling by a different panel of the same court. The goal of this decision is to preserve the legal status quo while the court reviews the CTA’s constitutionality.

Timeline of Events

December 3: A federal judge in Texas issued a preliminary injunction against the CTA, deeming it likely unconstitutional.
December 23: Another panel of the Fifth Circuit overturned this injunction, reinstating the CTA’s requirements.
December 26: The merits panel vacated the December 23 decision, reinstating the nationwide injunction and halting compliance obligations.

What’s Next

The Fifth Circuit will determine the CTA's constitutionality and the nationwide injunction's validity. Briefings are scheduled to conclude by February 28, 2025, with oral arguments planned for March 25, 2025. A resolution is unlikely before the end of 2025’s first quarter. It is hard to say if the Trump administration will influence the court’s actions.

Advice for Business Owners: Stay Informed

The legal situation is fluid and subject to change. Monitor updates from reliable sources, including legal advisors or industry associations, to stay aware of any shifts in compliance obligations.

Evaluate Your Readiness

While the CTA is currently on hold, it may be reinstated with little notice. Consider completing any ongoing analysis or filings to ensure your business can quickly comply if required.

Document Your Efforts

Keep thorough records of any steps taken toward compliance. This documentation can demonstrate good faith efforts to adhere to regulations if enforcement resumes.

Final Thoughts

Business owners are not obligated to meet the CTA’s reporting deadlines, but the situation remains unpredictable. Preparing proactively while watching for developments will help your business remain compliant and mitigate risks in this evolving regulatory environment.

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

Trent Cotney is a partner and Construction Practice Group Leader at Adams and Reese LLP and NRCA General Counsel. You can reach him at trent.cotney@arlaw.com or 866.303.5868.

KEYWORDS: legislation

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Trent Cotney is a Partner with Adams & Reese and a Florida Bar Board Certified Construction Lawyer, licensed to practice in multiple states across the U.S. and in Canada. With nearly 25 years of experience, Trent has dedicated his career to serving the construction and roofing industries. He is a zealous advocate for the international commercial roofing sector and serves as general counsel for over 10 prominent trade associations and organizations, including the National Roofing Contractors Association (NRCA), Florida Roofing & Sheet Metal Contractors Association (FRSA), National Slate Association, Roofing Technology Think Tank (RT3), and Western States Roofing Contractors Association (WSRCA). Trent’s commitment to the industry extends beyond legal counsel; he is an active participant in education, advocacy, and innovation, working tirelessly to address the challenges contractors face and advance the industry as a whole. Known for his deep understanding of construction law and unwavering dedication, Trent Cotney remains a trusted advisor and leader in the roofing community.