A federal district court in Texas has issued a nationwide preliminary injunction halting enforcement of the beneficial ownership reporting requirements under the Corporate Transparency Act (CTA). In the case Texas Top Cop Shop v. Garland (Dec. 3, 2024, U.S. Dist. Ct., Eastern Dist. of Texas, Case No. 4:24-CV-478), the court determined that Congress exceeded its constitutional authority by enacting the CTA, infringing on states' rights to regulate businesses. As a result, the court blocked FinCEN from enforcing the January 1, 2025, reporting deadline for all reporting companies.
This decision, issued on December 3, 2024, is likely to be appealed. In the meantime, businesses are not required to submit beneficial ownership information (BOI) reports to FinCEN. Companies that have already filed BOI reports should refrain from taking further action, including filing updates, until the case reaches a final resolution. For businesses that have not yet submitted their initial BOI reports, preparations can be paused until further notice, as a final ruling could take considerable time.
Although reporting is currently suspended, companies are encouraged to evaluate whether the CTA applies to them and, if applicable, begin gathering the necessary beneficial ownership data. This preparation will help ensure readiness in case the injunction is overturned or modified in the future. You can read the court’s opinion here: Texas Top Cop Shop v. Garland Opinion.
The HoganTaylor Tax Practice
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