On Tuesday, December 3, 2024, a judge in the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction precluding FinCEN from enforcing the Corporate Transparency Act (“CTA”) and its implementing regulations. The CTA requires most legal entities to electronically report Beneficial Ownership Information (“BOI”) by January 1, 2025 (unless an enumerated exemption applies). However, the preliminary injunction out of Texas has temporarily blocked these reporting requirements and the pending deadline to file.
The court’s injunction blocking the CTA and its implementing regulations specifically stated that it applies nationwide and is effective immediately. It is important to note that the injunction is not a final determination of the CTA’s constitutionality. Rather, the injunction temporarily stays reporting requirements while the underlying substantive litigation on the legal questions proceeds. The federal government/FinCEN will likely appeal the decision.
There are numerous ongoing legal actions across the country challenging the CTA and another U.S. District Court may decide differently with no final rulings having been made to date on any legal challenges to the CTA. Further guidance or comment is expected from the U.S. Department of Treasury/FinCEN as CTA enforcement could resume if the Texas court’s order is overturned. Kaufman & Canoles will continue to monitor developments in challenges to the CTA and, until such time as further comment from the Department of Treasury or a final order is issued by a court of national jurisdiction, K&C will continue to assist clients with filing their BOI Reports with FinCEN.
Reporting Companies that have already filed a BOI Report with FinCEN do not need to take any steps at this time.
