Latest CTA Development: Appeal on Fast Track

In Texas Top Cop Shop, Inc., et al v. Merrick Garland, the United States District Court for the Eastern District of Texas issued a preliminary nationwide injunction temporarily suspending enforcement of the Corporate Transparency Act (CTA) on constitutional grounds.  With the year-end filing deadline only weeks away, the nationwide injunction enormously complicates the CTA compliance process, forcing many companies to choose between spending potentially unnecessary time and money on compliance with a law that may never go into effect or missing the January 1 deadline if the preliminary injunction is lifted with no grace period.

On December 13, 2024, the government pressed forward on its announced intention to lift the preliminary injunction.  In its motion to the Fifth Circuit, the government requested the complete lifting of the preliminary injunction or, in the alternative, restricting the preliminary injunction to the District Court plaintiffs.  If the Fifth Circuit lifts or narrows the preliminary injunction, CTA compliance will snap back into place for everyone or almost everyone.

The appeal is running on a fast track.  In its brief to the Fifth Circuit, the government asked for a response from the plaintiffs by Thursday, December 19 and an ultimate ruling from the Fifth Circuit “as soon as possible, but in any event no later than December 27, 2024, to ensure that regulated entities can be made aware of their obligation to comply before January 1, 2025.”  In response to the government’s proposed calendar, the Fifth Circuit actually shortened the litigation timeline, accelerating the deadline for the plaintiffs’ response to Tuesday, December 17, and the government’s next and final filing to Thursday, December 19.

In light of these rapidly unfolding developments, the Fifth Circuit seems ready to render a quick decision about the ongoing validity of the District Court’s preliminary injunction (possibly as soon as the afternoon of Thursday, December 19).  However, apart from this, trying to predict the ultimate outcome of the Fifth Circuit appeal remains speculative.  For more guidance about what to consider in the interim, you can visit our Corporate Transparency Act Resource Center.

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If you have any questions about this latest CTA development or need help choosing the right compliance strategy in this highly uncertain and fluid legal environment, please contact your Herrick attorney or any member of Herrick's CTA team.

Mark A. Limardo at + 1 212 592-1494 or [email protected]
Theresa Fortin Balducci at + 1 212 592-1481 or [email protected]
Daniel A. Etna at + 1 212 592-1557 or [email protected]
Fred R. Green at + 1 212 592-5910 or [email protected]
Leah Kelman at + 1 973 274-2004 or [email protected]
Ellen L. Shapiro at + 1 212 592-1533 or [email protected]
Louis Tuchman at + 1 212 592-1490 or [email protected]

© 2024 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.