On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction preventing the federal government from enforcing the Corporate Transparency Act (CTA) and its key implementing regulations.
This decision impacts the January 1, 2025 deadline for businesses designated as “Reporting Companies” to submit beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
The case, Texas Top Cop Shop, Inc., et al v. Garland et al. (case 4:24-cv-00478 December 3, 2024), challenges the constitutionality of the CTA. The plaintiffs argue that Congress exceeded its authority in enacting the law. While the Court found these claims likely to succeed, the injunction is temporary and could be overturned on appeal. If the government prevails in future proceedings, the compliance obligations may resume.
What this means for Reporting Companies moving forward:
- Reporting Companies that have not yet complied with the CTA may pause their obligation to file their initial report by the January 1, 2025 deadline. However, Reporting Companies should continue to monitor FinCEN’s website for any updates regarding compliance deadlines. Although it is likely that FinCEN would provide additional time for filers in light of the Court’s injunction, FinCEN has not made an official statement confirming an extension.
- Reporting Companies that have already complied with the CTA may pause their obligation to provide updated reports within thirty (30) days of the change to any previously filed information.
