Just this month, in a case we have been closely tracking, a Texas federal district court issued a preliminary injunction blocking the enforcement of the Corporate Transparency Act (CTA) and its associated reporting requirements. This ruling comes less than a month before the January 1, 2025, compliance deadline for the CTA, which mandates that millions of small business owners report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
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In the case Texas Top Cop Shop v. Garland, the court granted the plaintiffs’ motion for a preliminary injunction, halting enforcement of both the CTA statute (31 U.S.C. § 5336) and the related reporting rule (31 C.F.R. 1010.380) nationwide. The court also stayed the compliance deadline, ruling that the statute is likely unconstitutional, as it may exceed Congress’s authority. This follows a similar case in Alabama earlier this year, where the court also found the CTA unconstitutional, but that decision applied only to the specific plaintiffs involved.
This nationwide injunction means businesses are not currently required to comply with the CTA’s reporting requirements unless the decision is overturned or modified by an appellate court. The government may appeal the decision. The Department of Justice has not yet indicated whether it plans to appeal, though it did appeal a similar ruling in Alabama to the 11th Circuit.
Once again, for now, businesses are relieved from the obligation to meet the CTA’s January 1 reporting deadline, pending further developments in the legal process.
If you would like a copy of the Court’s order, we would be happy to provide it to you. Just reply to this email with your request.
Author: Patrick MacQueen is the founder of Medalist Legal. Patrick’s legal career has been highlighted by work primarily in the areas of real estate transactional law and real estate litigation.
