On December 3, 2024, the US District Court for the Eastern District of Texas entered a preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its implementing regulations nationwide, concluding that the CTA is likely unconstitutional as it is outside Congress's power.
The ruling and temporary injunction effectively pauses the rollout of the CTA's reporting requirements while the court reviews the law's broader implications. The Court's order is a preliminary injunction and not a final decision and it is expected that the U.S. government will seek an expedited appeal of the decision and request a stay of the order of the federal district court. If overturned, those entities created before January 1, 2024 will still be required to file their Beneficial Owner Information (BOI) Report no later than December 31, 2024.
While we understand that clients may choose to pause filings in light of the ruling, we recommend that clients do not abandon preparations for eventual compliance and that it would be wise for non-exempt reporting companies that have not already filed their initial BOI report to continue to prepare for the filing and gather the information and documents needed to file to ensure that they will be in a position to complete their remaining filings on what may be a tight timeline.
At the time of this message, the Financial Crimes Enforcement Network (FINCEN) is still accepting BOI reports and has not released a statement addressing the ruling or its approach to the CTA's reporting requirement enforcement. Note that even if a stay is denied and the injunction remains in place, reporting companies are not precluded from proceeding with their filings if they choose, to avoid future uncertainty.
Our firm is closely monitoring the developments surrounding the CTA and its potential impact on businesses. However, if you intend to require assistance in filing your business's CTA BOI report(s) if the reporting requirements are reinstated and have not already contacted an attorney at our office, now is the time to do so.
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