U.S. DOJ Seeks to Pause or Narrow Injunction Blocking CTA; District Court Orders Expedited Briefing

In our prior notes of December 4 and December 9, 2024, we reported that (1) a district court in Texas issued a nationwide injunction halting implementation of the Corporate Transparency Act (CTA), and (2) the Financial Crimes Enforcement Network (FinCEN) had acknowledged that companies need not file CTA mandated disclosures while that injunction remained in effect.

As anticipated, the U.S. Department of Justice (DOJ) has now moved in the Texas district court to (i) stay the injunction pending appeal, or (ii) in the alternative, to stay application of the injunction to non-parties. The district court has ordered the plaintiffs to respond to DOJ’s motion by Monday, December 16, 2024, after which the district court will consider the matter. We anticipate the district court will rule quickly given that it construed DOJ’s motion as seeking emergency relief. The DOJ indicated in its motion that it also anticipated potentially moving the United States Court of Appeals for the Fifth Circuit for similar relief on December 12 or 13. Given the uncertainty arising from the litigation, we believe it prudent that companies subject to the end-of-year filing deadline continue to prepare their CTA filings, but we do not recommend that these companies actually make CTA filings.

If you have any questions concerning this memorandum, please feel free to contact your regular contacts at the firm.