Once again, the Corporate Transparency Act (CTA) has been met with a judicial roadblock, this time being enjoined nationwide and declared “likely unconstitutional.” On Dec. 3, 2024, U.S. District Court Judge Amos L. Mazzant issued a 79-page order [1] granting a preliminary injunction against the enforcement of the Corporate Transparency Act 31, U.S.C. § 5336 and its related Reporting Rule, 31 C.F.R. 1010.380.
Without assessing the constitutionality of the CTA with regard to potential First and Fourth Amendment violations as-applied to the named plaintiffs, Judge Mazzant found that the CTA and the Reporting Rule “mark a drastic two-fold departure from history” and exceed Congress’s powers, lacking “any tenable theory” that the legislation falls within those powers as set forth by the Constitution.
The constitutionality of the CTA is currently being reviewed by the Eleventh Circuit [2], which may provide an answer to the question Judge Mazzant leaves “for another day” – whether the CTA and Reporting Rule are absolutely unconstitutional.
Based on this preliminary ruling, “reporting companies” do not need to file BOI Reports by Jan. 1, 2025, and entities formed this year do not need to file BOI Reports following their formation. This preliminary injunction was issued by a district court judge, however, and FinCEN and the Justice Department have not yet stated a position on whether they will immediately appeal this decision or allow the case to play out through the court system.
Clients are advised to pay close attention to future developments surrounding the CTA, including whether an appellate court overrules or narrows this injunction and how the Eleventh Circuit rules in its pending CTA case.
[1] Texas Top Cop Shop, Inc., Et al., v. Garland, Et. al., No. 4:24-CV-478 (E.D. Tex. 2024).
[2] See NBSU v. Yellen, No. 24-10736 (11th Cir.)
