UPDATE: On December 23, 2024, the Fifth Circuit Court of Appeals reversed the Texas federal court’s nationwide injunction against enforcement of the Corporate Transparency Act (CTA). This means, the CTA reporting requirements are now back in effect though the deadlines have been pushed back slightly—in most cases to January 13, 2025. Read our December 24, 2024 article and please contact Danielle Hunt or Jesse Kobernick if you have any questions.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas (the “Court”) issued a nationwide injunction barring enforcement of the Corporate Transparency Act (CTA) and its implementing regulations.1 In its opinion, the Court ruled that “even in the face of the deference the Court must give Congress, the CTA appears likely unconstitutional,” and thus must be enjoined. The Court further ruled that:
“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. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025 [Beneficial Ownership Information (“BOI”)] reporting deadline pending further order of the Court.”
There will be further proceedings in the Court to determine whether this preliminary injunction becomes permanent. In addition, the government may appeal this decision. The upshot of the Court’s ruling for now, however, is that companies are not required to comply with the CTA’s reporting requirements, including filing BOI reports with FinCEN, the federal bureau within the U.S. Treasury Department tasked with oversight of the CTA.
Miller Nash is continuing to follow developments and will keep you apprised as more information becomes available. Please reach out to your contact at Miller Nash (or Danielle Hunt or Jesse Kobernick) if you have any questions.
1The case is Texas Top Cop Shop, Inc. et. al. v. Merrick Garland, et. al.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
