On December 3, 2024, the United States District Court for the Eastern District of Texas issued a preliminary injunction temporarily halting enforcement of the Corporate Transparency Act (CTA) and staying the compliance deadline of January 1, 2025 (Texas Top Cop Shop v. Garland (E.D. Tex.)). The court determined that Congress likely exceeded its constitutional authority in passing the CTA, and that the rules promulgated by FinCEN with respect to the CTA are therefore likely unconstitutional.
The result of this ruling is that the CTA is temporarily unenforceable on a nationwide basis until the conclusion of the proceedings in the case.
We expect that the government will appeal this ruling shortly and will at a minimum attempt to narrow the decision to apply only to the plaintiffs in the case. Whether a ruling comes before the January 1, 2025 CTA filing deadline is not certain. It is also not certain that FinCEN will adopt a grace period for late filings due to any confusion or delays related to the injunction .
We understand why companies may want to delay CTA filings they had intended to make before the deadline. Nevertheless, we recommend that companies complete preparations in anticipation of a filing should the ruling be overturned.
We will keep you apprised of any important developments as this case proceeds.
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