On Tuesday, December 3, 2024, the U.S. District Court for the Eastern District of Texas (Judge Amos Mazzant), in Texas Top Cop Shop, Inc. et al. vs. Garland, issued a nationwide preliminary injunction against the enforcement of the reporting rule under the Corporate Transparency Act (“CTA”) and its impending January 1, 2025 filing deadline. In ordering the injunction, the Court has determined that the CTA and its reporting requirements are likely unconstitutional for purposes of a preliminary injunction. The Court stated that the CTA may not “be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
The Court’s opinion can be found here: Opinion.
THE EFFECTS OF THE RULING
- The CTA and its reporting requirements cannot be enforced across the entire United States pending further court orders.
- Approximately 32.6 million existing business entities are temporarily relieved from the obligation to disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN).
- The January 1, 2025, deadline for beneficial ownership information (BOI) reporting has been stayed. Thus, reporting companies are currently not required to comply with this deadline until further notice from the court.
- The case is still in its preliminary stages, and further legal proceedings are expected. To that end, the government will likely appeal this decision or seek to modify the injunction.
While this injunction provides immediate relief for affected entities, it’s important to note that the situation remains fluid. The ultimate fate of the CTA and its reporting requirements remains uncertain, pending the final resolution of the legal challenge.
Should you have any questions or concerns about this preliminary injunction and the next steps for your business, we invite you to reach out to our team by emailing info@bhgrlaw.com or calling us at 303.402.1600.
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