By: Tarig Anani and Brett Chisum
On December 3, 2024, the Honorable Judge Amos L. Mazzant, of the U.S. District Court for the Eastern District of Texas, granted a nationwide preliminary injunction that enjoins the federal government from enforcing the Corporate Transparency Act (the “CTA”), a law requiring business entities that meet certain requirements to submit Beneficial Ownership Information (“BOI”) to the Department of Treasury, less than one month before the CTA’s January 1, 2025, enforcement date. In issuing the temporary injunction, Judge Mazzant found that the CTA exceeds Congress’s ability to regulate interstate commerce, and, as a result, it is likely unconstitutional. Texas Top Cop Shop v. Garland, E.D. Tex., No. 4.24-cv-00478.
It is important to note that this ruling is not a final decision. This injunction could be dissolved if, either the government prevails on the merits of the case at trial, or if the decision is appealed to the Fifth Circuit Court of Appeals and overturned. There is another case related to the constitutionality of the CTA and its BOI filing requirements before the 11th Circuit Court of Appeals, which means that this issue may eventually reach the United States Supreme Court before we have a final resolution.
In any event, clients who otherwise were facing a January 1, 2025, deadline to file a BOI report with the Treasury Department’s Financial Crimes Enforcement Network, now have a temporary reprieve from that requirement.
Reporting companies that have not yet filed should be prepared to file on short notice should the Fifth Circuit or another court of appeals stay or overturn the temporary injunction that put a hold on reporting requirements. FinCEN has not paused accepting BOI Reports and has not yet issued any public statements regarding the temporary injunction.
FinCEN has posted the following notice on its website:
McCathern, Shokouhi, Evans will continue monitoring for any decisions affecting the requirements and potential enforcement of the CTA. If you have any questions regarding the Corporate Transparency Act and its Beneficial Ownership Information reporting requirements, please contact us at 214-741-2662.