A federal appeals court has reversed itself and reinstated an injunction halting enforcement of the ownership reporting requirement in the Corporate Transparency Act, giving relief to thousands of farmers who faced an imminent filing deadline.
The 5th Circuit Court of Appeals expedited the government's appeal Thursday of a district court injunction that had blocked enforcement of the CTA, at the same time reversing a decision issued Monday by a different 5th Circuit panel that had stayed the injunction.
The merits panel that is hearing the case vacated that portion of the motions panel’s decision. That means businesses that had been faced with a Jan. 13 deadline to file Beneficial Ownership Information with the Treasury Department will now have to await the outcome of the case in the 5th Circuit to determine the constitutionality of the CTA.
The motions panel had sided with the government.
The federal government “has made a strong showing that it is likely to succeed on the merits in defending CTA’s constitutionality,” that panel said. “When Congress passed the bipartisan statute in 2021, it used its ‘broad authority under the Commerce Clause’ to regulate economic activity,” the court added, quoting a 2005 Supreme Court decision.
But the merits panel said, “[I]n order to preserve the constitutional status quo while [it] considers the parties’ weighty substantive arguments,” it was vacating that portion of the other panel’s order that had stayed the injunction.
For small businesses, including ag producers, “it’s been a roller-coaster here this week,” said Dustin Sherer, director, government affairs, at the American Farm Bureau Federation. The bureau called it "court-ordered whiplash" in a statement Friday.
Sherer acknowledged the latest ruling is good news for producers but added that some who rushed to file may have had their holidays disrupted.
After the initial appeals court ruling, Treasury’s Financial Crimes Enforcement Network (FinCEN) said it would extend the filing requirement from Jan. 1 to Jan. 13.
“It's tough for the people that saw everything that happened on Monday and decided to try to get it done,” Sherer said, both because “it probably messed up their holiday a little bit, and now their information is with the feds, and it at least currently doesn't need to be.”
For now, however, “there is no compliance requirement, and so we'll see what happens again here in the coming weeks,” he said.
In a notice issued today in the case docket, the court issued the briefing schedule and slated oral argument for March 25 in New Orleans.
The case is Texas Cop Shop v. Garland, 24-4092. Among the plaintiffs-appellees are the Libertarian Party of Mississippi, Mustardseed Livestock of Lingle, Wyoming, and the National Federation of Independent Business.
For more news, go to www.Agri-Pulse.com
