U.S. District Court Enjoins Enforcement of the CTA Nationwide

The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on December 3, 2024, in Texas Top Cop Shop, Inc., et al. v. Garland, et al. (No. 4:24-CV-0478). The court both enjoined enforcement of the reporting obligations under the Corporate Transparency Act (CTA) nationwide, and stayed the CTA’s year-end compliance deadlines, holding that “[n]either 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.”

What This Means

Per the court’s Opinion and Order, both the CTA’s statutory provision (31 U.S.C. § 5336) and its implementing regulation (31 C.F.R. § 1010.380) are currently blocked nationwide. Thus, reporting companies are currently not required to comply with the January 1, 2025, BOI reporting deadline; however, this is a developing matter that may be subject to change. Similar litigations in other federal district courts are also proceeding. 

What to Expect Going Forward

• As this is a preliminary injunction that may be changed or overturned in the future, reporting companies, especially entities that have not yet filed their beneficial ownership information reports (BOI Reports) should stay apprised of ongoing developments. This decision may be appealed; thus, the ultimate outcome and resolution of the constitutionality of the CTA is still unsettled, and may not be settled for months, especially with upcoming changes to administration.
• Accordingly, we recommend that reporting entities continue to maintain their internal efforts to comply with the CTA and/or compile applicable information so that such entities can file initial or updated BOI Reports promptly if or when the CTA’s requirements are reinstated. Further, while not required, reporting companies can continue file BOI Reports on the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN) database if they still choose to do so.

We intend to provide further material updates as they unfold, including any responses from the Department of the Treasury to this recent court decision. For more information about the CTA, please visit our Corporate Transparency Act Resource Center and reach out to Ballard Spahr to discuss any questions you may have.

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