Our message last week regarding the Corporate Transparency Act (CTA) mentioned that litigation was ongoing – and today we are sending a critical update regarding a new ruling handed down on Tuesday that may affect your decision to file beneficial ownership information. If you have already determined that the CTA is inapplicable to you, feel free to disregard this message.
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction of compliance with the Corporate Transparency Act (CTA). The Court said that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction.
This is not an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution. The Court went further and issued a nationwide injunction, applying against enforcement of the CTA and its impending January 1, 2025 filing deadline.
The Court stated: “…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.”
Please note this is a preliminary injunction, and companies need to pay attention for additional updates and proceedings in this and other cases which could modify or change this order. While we wait for the courts to decide, Anderson Jones’ attorneys strongly recommend retaining the resources we circulated last week for your reference in case the injunction is overturned, ensuring readiness to act in the event this landscape changes abruptly in the future. Please note that while we are actively monitoring the situation and will do our best to keep you informed of any updates, the responsibility for compliance with the Corporate Transparency Act remains with each entity.
