The Corporate Transparency Act (CTA) injunction has been reinstated...again. The back and forth court rulings have made it hard for business leaders to know what to do.
On December 26, 2024, the U.S. Court of Appeals for the 5th Circuit issued an order vacating the December 23, 2024, order that had reinstated the CTA reporting obligations. This latest decision means the December 3, 2024 preliminary injunction blocking enforcement of the CTA is back in effect.
The court explained its decision as necessary "to preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments." The court has also expedited the appeal.
Here’s a summary of what's happened so far:
- Many lawsuits have been filed challenging the constitutionality of the Corporate Transparency Act, which require certain disclosures (from nearly all small businesses) to a law enforcement agency.
- On December 3, 2024, a district court issued an injunction that temporarily blocked enforcement of the CTA.
- The government asked the district court to pause the injunction and allow the law to remain enforceable during the legal process. This request was denied.
- The government appealed to the 5th Circuit asking for an emergency stay of the injunction. On December 23, 2024, a panel of judges at the 5th Circuit temporarily granted the stay, allowing the government to enforce the law while the appeal continued.
- The Merits Panel of judges reviewed the situation and decided to vacate the earlier decision that allowed the law to be enforced. This restores the district court’s injunction, meaning the government is once again blocked from enforcing the CTA for now.
- The case is still moving forward with an expedited timeline. The court will soon hear arguments about whether the law is constitutional.
Conclusion (for now)
The government cannot enforce the Corporate Transparency Act--for now--as the injunction blocking it has been restored. This is NOT the end of this matter, as this case moves quickly toward a final decision.
