The Department of Justice and the Treasury’s Financial Crimes Enforcement Network have appealed the Texas District Court’s order prohibiting enforcement of the Corporate Transparency Act to the Court of Appeals for the Fifth Circuit, and have moved for a stay of the injunction. The Fifth Circuit could let the injunction stand or immediately revise the scope, without a final determination on the constitutionality of the CTA. Revisions could range from limiting the injunction’s application to the named plaintiffs to staying the injunction entirely.
Courts generally evaluate such motions based on factors such as the likelihood of success on the merits, irreparable harm, balancing of harms, and public interest considerations. In cases about federal enforcement, stays pending appeal have sometimes been decided within days of the appeal.
Some reporting companies will simply not want to incur any additional expense or gather any sometimes-difficult-to-obtain information until the temporary injunction is stayed; they are willing to take the risk that they will need to scramble if the temporary injunction is stayed with immediate effect. Other companies, who have already incurred some CTA preparation costs and who have simple ownership and control structures, will want to finish the process and eliminate any restart costs by having the information ready for filing.