Court Issues Nationwide Injunction Against Enforcement of the Corporate Transparency Act Reporting Deadline
On December 3, 2024, a federal judge in the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction, which enjoins enforcement of the Corporate Transparency Act (CTA) on a temporary basis.
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In Texas Top Cop Shop, Inc., et al. vs. Garland, et al., the court found that the plaintiffs demonstrated a substantial likelihood of success on the merits of their claims that the CTA is unconstitutional.[1]
Prior to this injunction, all reporting companies formed prior to January 1, 2024 (that did not meet one of the CTA’s exemptions) would have been required to file certain beneficial ownership information (BOI) with the U.S. Department of the Treasury’s (DOT) Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.
The court did not find, in this ruling, that the CTA and its reporting rules are unconstitutional. However, the court did enjoin the government (the DOT and FinCEN) from enforcing the CTA, stating that “reporting companies need not comply with the CTA’s January 1, 2025 BOI reporting deadline pending further order of the Court.” The court’s preliminary injunction applies on a nationwide basis to all reporting companies.
As of the date of this client alert, FinCEN has not published a response to the ruling or guidance regarding CTA compliance. However, we anticipate that FinCEN will do so. It also is anticipated that there will be future rulings in this and other pending cases on the substantive issue of whether the CTA is constitutional and the law’s scope, and these rulings could be appealed. This injunction should be viewed as a delay in the application of the CTA rather than a final resolution of whether the CTA, including the obligation to file BOI reports, is enforceable.
While reporting companies are not required to file BOI reports by January 1, 2025, as long as the injunction remains in effect, we advise that reporting companies continue to prepare to make CTA filings in the event the injunction and stay are lifted or modified.
For additional information or assistance regarding the CTA, contact Jon Katona, Patrick Murphy, Samantha Blank or Madison Mueller.
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
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).