Federal District Court Issues Nationwide Preliminary Injunction Against Enforcement of the Corporate Transparency Act
On December 3, 2024, the United States District Court for the Eastern District of Texas issued a preliminary injunction against the Corporate Transparency Act (CTA) and its reporting rules. The judge ruled that the CTA likely constitutes an unconstitutional overreach by Congress. Consequently, the upcoming compliance deadline has been delayed nationwide.
The CTA established new reporting requirements that affect many businesses, necessitating certain companies to disclose their beneficial owners through filings with the Financial Crimes Enforcement Network (FinCEN). For more information, please refer to our earlier blog here.
The district court’s ruling implies that no entity is currently obligated to comply with the CTA. However, it is anticipated that the government will appeal this decision, as the injunction is only preliminary. Higher courts, such as the Circuit Court or the Supreme Court, could overturn the injunction at any time.
Businesses now face the decision of whether to file the report by the December 31, 2024 deadline or await further developments regarding the preliminary injunction. A final resolution may not be reached until next year, so it is advisable for businesses to continue gathering required information and either file now or be prepared to file as soon as there is more definitive guidance provided by the courts or the government.
Copeland Buhl recommends that clients seek advice from their legal counsel regarding their CTA filing requirements.