Last week, District Judge Amos L. Mazzant of the Eastern District of Texas issued a preliminary injunction ordering that the entire Corporate Transparency Act (CTA) is enjoined nationwide and that the US government in enjoined from enforcing the BOI Reporting Rule (the final rule implementing the CTA and providing definitions and guidance for the statute) and the Jan. 1, 2025, compliance deadline.

The US government filed a notice of appeal and yesterday filed a motion request to Judge Mazzant to stay the preliminary injunction because the government is appealing to the Fifth Circuit Court of Appeals and if Judge Mazzant doesn’t do so, the government provided that it would seek this relief today or tomorrow December 13, 2024, for a lift of the nationwide stay by the Court of Appeals.

We have explained that the trouble with not complying with the CTA is, what happens when the injunction is lifted and compliance is required before January 1, 2025. It does not appear based on the government’s actions that FinCEN will give an extension to comply before penalties kick in on January 1, 2025. It seems reasonable to do so, but not guaranteed based on FinCEN’s message that reporting companies can continue to comply if they want to.

We will keep you posted of developments. For now, although the nationwide preliminary injunction relieves the immediate obligation – i.e., right now – to file beneficial ownership reports with FinCEN, it would be prudent for non-exempt reporting entities that haven’t yet filed to continue to prepare for their report filing by continuing to gather all information and documents that the CTA requires. If it turns out that compliance is not required, then they don’t have to submit their report to FinCEN, but if they do and FinCEN does not give a reasonable time thereafter for compliance, then reporting companies don’t have to scramble at the last minute to comply before the hefty $591 a day fines kick in.

Here is the government’s motion to Judge Mazzant.