In just under three weeks, the BOI rollercoaster has rounded its impending deadline corner, looped through a nationwide injunction, plummeted down stay gulch, and shot up the Texas twostep incline! It’s been quite a ride . . . and we’re just getting stated. Here’s a quick synopsis.
Impending Deadline Corner. The Corporate Transparency Act (“CTA”) requires nearly every business entity to file a report disclosing the identity of the persons who own or control the entity. These disclosures are commonly referred to as BOI reports. The reporting deadline was January 1, 2025.
Injunction Loop. On December 3, 2024, less than a month before the deadline, and after millions of Americans had already filed their BOI reports, everything changed. In a case called Texas Top Cop Shop v. Garland, the Texas Federal District Court found that the “CTA is likely unconstitutional” and granted the plaintiff’s motion for preliminary injunction. The Court’s ruling enjoined the government from enforcing the BOI reporting requirement on a nationwide basis.
Stay Gulch. The government immediately appealed the ruling to the Fifth Circuit Court of Appeals. On December 23, 2024, a panel of the Fifth Circuit (the motion panel) stayed the District Court’s nationwide injunction on an emergency basis. In other words, BOI reporting was back on track and reports were due in just eight days! Shortly thereafter, FINCEN, the agency tasked with implementing the CTA, extended the BOI reporting deadline to January 13, 2025. However, the motion panel’s ruling was not the last word.
Texas Twostep. On December 26, 2024, another panel of the Fifth Circuit (the merit panel) overruled the motion panel’s stay. This ruling reinstated the District Court’s nationwide preliminary injunction. Currently, the government cannot enforce the reporting requirement under the CTA. However, FINCEN is still accepting voluntary BOI reports.
As with any good amusement ride, it’s hard to see what’s coming next. The Fifth Circuit has scheduled oral arguments on the preliminary injunction for March 25, 2025. Given the apparent diversity of thought in the circuit, the outcome is anybody’s guess. Moreover, whatever the Fifth Circuit decides on the preliminary injunction, the Texas Top Cop Shop case is far from over. We are only at the preliminary injunction stage; the full case has not yet been heard at the District Court level. Absent legislative intervention, it will likely continue to wind its way through the system for many months to come. Of course, there will be a final ruling from the District Court. . . , someday. Whatever that ruling is, it will certainly be appealed again to the Fifth Circuit and possibly end up on the Supreme Court’s docket.
So . . . please make sure your seat belt is securely fastened and keep your hands and arms inside the ride at all times.
Marc was born and raised right here in the Valley of the Sun. After taking a degree in English Literature, summa cum laude, from Arizona State University, he decided to stay close to home and enrolled at ASU’s College of Law. Since 1998, Marc has practiced in the areas of business transactions, real estate, estate planning, and estate and trust administration. He prides himself on his client centered approach to the law. By focusing on the client’s values and goals first, Marc designs and implements practical legal solutions tailored to the client’s individual needs. Read more>