On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). This decision arose from Texas Top Cop Shop, Inc. v. Garland, where plaintiffs challenged the CTA’s beneficial ownership reporting requirements on constitutional grounds.
The CTA, enacted in 2021, mandates that certain corporations, limited liability companies, and similar entities report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). The law aims to enhance corporate transparency and combat illicit financial activities. However, the recent court ruling halted these requirements nationwide, citing concerns over constitutional issues and the significant compliance burdens on small businesses.
As a result of this injunction, affected entities are currently not required to comply with the CTA’s reporting mandates. However, given the potential for appeals and changes in the legal landscape, businesses must stay informed about ongoing developments.
We recommend that you consult with your attorney to understand how this ruling may impact your specific circumstances and to receive guidance on compliance obligations moving forward.
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