Corporate Transparency Act: Nationwide Injunction and Next Steps
12.17.24
As we previously reported, a federal judge in the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc. vs. Garland that enjoined enforcement of the Corporate Transparency Act (the CTA) on a temporary basis.[1] Since the date of that publication, the U.S. Department of Justice (the DOJ) filed a notice of appeal in the Fifth Circuit, as well as a motion in the Fifth Circuit to stay the preliminary injunction or to narrow the injunction to just the plaintiffs in the case. In response, the Fifth Circuit ordered an expedited timeline, and it is likely the court intends to issue its decision related to the government’s motion before the end of 2024.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) published a statement on the order:
“While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
While the Fifth Circuit is likely to provide clarity on the preliminary injunction before the end of this year, it is unlikely that this case will be completely resolved. It may take well into next year for the District Court to issue its final order. That order would be subject to appeal. In addition, there are other cases pertaining to the enforceability of the CTA that are being adjudicated (see our publication on Nat’l Small Bus. United v. Yellen), and the timeline for their resolution is uncertain.
Reporting companies should continue to monitor for more information, pending the outcome and finality of the appeals process, and any other litigation challenging the constitutionality of the CTA.
For additional information or assistance regarding the CTA, contact Jon Katona, Patrick Murphy, Samantha Blank or Madison Mueller.
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For additional information on the CTA, please see our previous publications:
- Corporate Transparency Act Effective Date Approaches,
- The Corporate Transparency Act is in Effect: What You Need to Know,
- The Corporate Transparency Act Found Unconstitutional for Specific Plaintiffs
- Filing Deadline Approaches: The Corporate Transparency Act
- Court Issues Nationwide Injunction Against Enforcement of the Corporate Transparency Act Reporting Deadline
You can also visit FinCEN’s BOI webpage here.
[1] Texas Top Cop Shop, Inc., et al. vs. Garland, et al., No. 4:24-cv-00478-ALM (E.D. Tex. Dec. 3, 2024).