Nationwide Injunction Halts Corporate Transparency Act Reporting Requirements

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., temporarily halting enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements. This injunction suspends the January 1, 2025, filing deadline and applies to businesses across the United States.

Key Implications for Our Clients:

1. For Clients Who Have Already Filed:
   No immediate action is required. However, clients must continue to monitor any changes in beneficial ownership, as future filings may be needed to update BOI reports as needed  if the injunction is overturned or modified.
2. For Clients Who Have Not Filed:
   Filing is not required while the injunction is in place. However, businesses should prepare for potential compliance if the Texas District Court’s decision is reversed or the scope of the injunction is narrowed. Preparatory steps may include:

• • Obtaining a FinCEN identifier to streamline future reporting.
  • Gathering information to facilitate the BOI filing if necessary.

Uncertain Legal Landscape:
While the injunction is currently nationwide, the government may seek to narrow its scope to apply only to the named plaintiffs in the case or challenge the ruling on appeal. If successful, reporting companies could face a compressed timeline to comply with the CTA’s reporting requirements.

The FINCEN E-Filing System portal remains open if clients wish to proactively submit their BOI reports or prepare for future compliance.

FinCEN’s Response:

The Department of Justice filed a Notice of Appeal on December 5, 2024, asserting its belief in the constitutionality of the CTA and citing favorable rulings from other courts. Meanwhile, FinCEN confirmed it will comply with the order during litigation, clarifying that reporting companies are not required to file BOI reports or meet the reporting deadline but may do so voluntarily.

Next Steps:
CCM will continue monitoring developments and provide updates as the case progresses. For additional resources, visit the CCM CTA Resource Library.