On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction staying the enforcement of the Corporate Transparency Act (CTA) and its Reporting Rule. The effect of the injunction is nationwide.
The injunction was issued in the case of Texas Top Cop Shop, Inc. v Garland (E.D. Texas, No. 4:24-cv-00478; December 3, 2024). The Court did not make an affirmative finding as to the CTA’s constitutionality or that the CTA is contrary to law. Rather, the Court entered a preliminary injunction putting on hold the enforcement of the CTA and its Reporting Rule. The injunction effectively allows companies that are subject to the CTA to delay compliance with the January 1, 2025 Beneficial Owner Information reporting deadline, pending further order of the Court. Although the reporting deadline and enforcement have been enjoined, we encourage reporting entities to continue processing their Beneficial Owner Information reporting.
Effective January 1, 2024, the CTA became a federal law affecting all corporations, limited liability companies, limited partnerships, and other entities registered with the Secretary of State of the state of formation. The CTA requires all reporting entities to register their beneficial ownership with the Financial Crimes Enforcement Network (FinCEN) database before the end of this year. FinCEN is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes.
For more information or to discuss any questions you may have concerning your company and the CTA, please contact Joan Berg at [email protected] or call 312-648-2300.
