Update Regarding the Corporate Transparency Act

On December 3, 2024, a Texas District Court in the Eastern District of Texas, issued a nation-wide preliminary injunction against the enforcement of the Corporate Transparency Act (“CTA”) finding that the CTA and its reporting rules are likely unconstitutional for purposes of a preliminary injunction in the case of Texas Top Cop Shop, et al. v. Merrick Garland, et al., USDC ED TX No. 4:24-cv-478.  However, the Court has not made a final decision of whether the CTA is, in fact, unconstitutional.  The Court granted a preliminary injunction as follows:

• The Court GRANTS Plaintiff’s Motion for a Preliminary Injunction.  Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under §705 of the APA.  Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court [page 79 of the Court’s ruling; emphasis added].

We anticipate the Government will seek a reversal of this ruling by the Fifth Circuit Court of Appeals, the governing appellate court.  It is unclear how the Fifth Circuit might rule or when.  Thus, it is possible the injunction may be vacated prior to the reporting deadline of January 1, 2025. 

A link to the decision can be found here: cta-v-garland-district-court-opinion-preliminary-injunction.