On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a Memorandum Opinion and Order granting a preliminary injunction that temporarily halts the enforcement of the Corporate Transparency Act (CTA).
What You Need to Know:
- U.S. District Court (E.D. Texas) ordered a temporary halt to the enforcement of the Corporate Transparency Act (CTA).
- The Order granting a preliminary injunction applies nationwide.
- Entities subject to the CTA will not be required to file beneficial ownership reports with FinCEN by January 1, 2025.
- The Order is temporary, and businesses may wish to proceed with filing of beneficial ownership reports in the event an appellate court overturns the injunction.
This decision is the latest and most significant of the legal challenges to the CTA, which was enacted to enhance transparency in corporate ownership by requiring certain entities to disclose beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). An appeal to the Fifth Circuit Court of Appeals is anticipated, and both Congress and FinCEN may take additional action before the end of the year.
What Does This Mean for You?
This nationwide injunction means, that for the time being, companies are not required to file Beneficial Ownership Information Reports (BOIRs) required by the CTA. While we understand that clients may elect to pause filings in light of the ruling, we recommend that clients do not abandon preparations for eventual compliance. Because an appeal may be filed and the injunction may be stayed or narrowed, clients should ensure that BOIR filings will be able to be completed on a very tight timeline.
