Corporate Transparency Act on hold again

Published 9:35 am Tuesday, December 31, 2024

The 5th U.S. Circuit Court of Appeals has reversed itself and put the Corporate Transparency Act back on hold until the full court has heard arguments on the reporting law’s constitutionality.

The court reinstated a preliminary injunction Dec. 26 barring the Treasury Department from enforcing the law. The order came three days after a different 5th Circuit Court panel set aside the injunction.

The new ruling will preserve the constitutional status quo while the court weighs the arguments, according to an order signed by the court’s clerk, Lyle Cayce.

The American Farm Bureau and National Cattlemen’s Beef Association issued statements praising the latest ruling.

Postponing the filing requirement was the right thing to do, but the legal back and forth made for a stressful holiday season for many farm families, Farm Bureau President Zippy Duvall said in a statement.

“Lack of guidance and poor public outreach from the government have left many farmers in the dark about whether they’re expected to file,” he said.

The act requires an estimated 32.6 million businesses with fewer than 20 employees and less than $5 million in annual review to submit the photos and personal information of owners and other decision-makers.

The federal Financial Crimes Enforcement Network will share the information with domestic and foreign law enforcement and intelligence agencies investigating money laundering crimes.

The reporting deadline was in January. Because of the latest ruling, companies are not currently required to report, though may voluntarily submit the personal information, according the Treasury Department.

The law has drawn lawsuits in courts across the country. Federal judges in Oregon and Virginia have ruled the law appears constitutional.

U.S. District Judge Amos Mazzant in East Texas ruled Dec. 3 the law likely exceeded Congress’ authority to regulate commerce, foreign affairs and tax collections.

U.S. attorneys appealed to the 5th Circuit Court. The three-judge panel reviewing the government’s motion reversed Mazzant’s order. The government’s victory lasted just three days.

The legal outlook could get more complicated. The 11th U.S. Circuit Court of Appeals in September held a hearing on the law’s constitutionality. U.S. attorneys have asked the court to rule as soon as possible.

Marketplace