Articles

CTA Reporting Requirements: The Never-Ending Rollercoaster

Legal Alert by Lamb McErlane attorneys: Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.

In an important development, the legal landscape surrounding the Corporate Transparency Act (“CTA” or “Act”) continues to evolve. This article provides a summary of recent updates in ongoing litigation concerning the CTA, and serves as an update to our December 4, 2024, article, Breaking News: Federal Court Blocks Enforcement of Corporate Transparency Act Nationwide – At Least For Now.” While the CTA’s reporting requirements (the “Reporting Rule”) are involved in a game of on-again-off-again, here’s what you need to know.

Current Status
Pursuant to an  Order issued December 26, 2024 (the “December 26 Order”) by the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”), reporting companies are not currently required to file beneficial ownership information (“BOI”) with the Financial Crimes Enforcement Network (“FinCEN”), and are not subject to liability for failing to do so while the December 26 Order remains in force.

Background
On December 23rd, the Fifth Circuit, in Texas Top Cop Shop, Inc. v. Garland, issued a stay in the enforcement of a nationwide preliminary injunction, issued December 3rd, that had temporarily blocked enforcement of the Reporting Rule. This “December 23 Order” reinstated the reporting obligations subject to certain extended deadlines.

However, just three days later, the Fifth Circuit reversed its own order. Whereas pursuant to the December 23 Order, businesses were to comply with the CTA’s new reporting deadline as early as January 13, 2025 , now the Reporting Rule has been paused once again. The merits panel now has the appeal, which remains expedited, with a briefing scheduled expected to be issued shortly. The Fifth Circuit, to preserve the constitutional status quo while the merits panel considers the parties’ “weighty substantive arguments, determined to vacate that part of the motions-panel order granting the Government’s motion to stay the District Court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule (i.e., the December 23 Order).

Implications for Businesses
The Fifth Circuit’s decision introduces significant uncertainty regarding the future enforcement of the Reporting Rule. For now, businesses can rest easy without a current obligation to file a BOI report. However, non-CTA-exempt businesses should continue to stay abreast of updates pending further court rulings or FinCEN guidance. Of course, businesses may (but are not obligated to) continue to voluntarily submit BOI reports.

To be very clear, neither we nor our Firm (Lamb McErlane PC) will be responsible for filing BOI on anyone’s behalf unless and until agreed to in writing by all parties.

If you have any questions or if we may be of further assistance regarding your entity’s obligations under the CTA, or other health law matters, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

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*This alert is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic, any health care matter, or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.

Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for 50 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.