On December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, Attorney General of the United States, et al., Judge Amos Mazzant of the United States District Court (Eastern District of Texas/Sherman Division) issued a preliminary nationwide injunction barring the enforcement of the Corporate Transparency Act (CTA) finding the following:
Having determined that Plaintiffs have carried their burden, the Court GRANTS Plaintiff's Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA [Administrative Procedure Act]. Neither may be enforced, and reporting companies need not comply with the CTA's January 1, 2025, BOI [beneficial ownership information] reporting deadline pending further order of the Court.
Takeaways:
Readers and reporting companies are cautioned that an appeal of the injunction (which may be swift) could result in its reversal or narrowing so that the filing deadline of January 1, 2025 for reporting companies formed before 2024 ultimately may not be extended. Note that the order does not specifically address other filing deadlines for newly formed companies. Presumably, the injunction of the CTA and the Reporting Rule would apply to other deadlines as well. As of this writing, FinCEN (Financial Crimes Enforcement Network of the U.S. Department of Treasury) has not issued any statement about the injunction.
We will continue to monitor developments.
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