A federal district court in Texas has issued a landmark decision postponing the enforcement of the Corporate Transparency Act (the “CTA”). The Court held that the CTA exceeds Congress’ power and is therefore likely unconstitutional. As a result, reporting companies are no longer required to comply with the CTA’s January 1, 2025, reporting deadline.
As a reminder, the CTA imposed reporting requirements on many small businesses, requiring the “beneficial owners” of reporting companies to submit sensitive information to the federal government. In its ruling, the court highlighted that this reporting constituted an overreach into state-regulated corporate formations and raised concerns about potential violations of privacy and constitutional protections.
While this ruling marks a victory for critics of the CTA, the future enforceability of the law remains uncertain. For now, we await further federal guidance.
