On December 3, 2024, the U.S. District Court of the Eastern District of Texas issued a nationwide injunction against the enforcement of the Corporate Transparency Act (“CTA”) (Texas Top Cop Shop v Garland et al.). The injunction comes less than a month before the impending January 1, 2025 filing deadline for an estimated 32.6 million existing reporting companies.
In its Order, the Court (i) enjoined the CTA and enforcement of the Financial Crimes Enforcement Network (FinCEN)’s final reporting rule implementing the CTA (referred to by the Court as the “Reporting Rule”) and (ii) stayed the compliance deadline. As a result, reporting companies “need not comply with the CTA’s January 1, 2025, BOI reporting deadline…” The Order temporarily pauses enforcement of the CTA, but enforcement could resume if the Order is overturned or if the government prevails on the merits of the case. As the Court puts it, “whether the CTA and Reporting Rule are absolutely unconstitutional is a question for another day.”
HSE is monitoring several challenges to the CTA and encourages reporting companies to stay tuned for additional updates. In the meantime, we encourage all reporting companies to continue collecting the information necessary to file the BOI report to comply with the CTA in the event the injunction or stay is lifted.
For more information on the Corporate Transparency Act (“CTA”), see HSE’s December 18, 2023 LEGALcurrent, or contact a member of Harter Secrest & Emery’s Corporate group.