On December 3, 2024, a U.S. District in Texas granted a national preliminary injunction that prevents the federal government from enforcing the Corporate Transparency Act (the “CTA”) and its implementing regulations.  The CTA, which went into effect January 1, 2024, required “reporting companies” to disclose information about their beneficial owners — which are the individuals who ultimately own or control a company — to the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).

Several plaintiffs filed a lawsuit in May, asserting that the government overstepped its authority under the Constitution in passing the CTA.  The Court found that the plaintiffs were likely to succeed on the merits of their claims and issued a nationwide injunction.  The Court’s order states that neither the CTA nor the implementing rules adopted by FinCEN may be enforced and that reporting companies need not comply with the CTA’s upcoming January 1, 2025 deadline for filing beneficial ownership reports.

The Court’s order is only a preliminary injunction and not a final ruling. The Court’s order temporarily pauses enforcement of the CTA on a nationwide basis, but if the Court’s order is overturned on appeal or the Government ultimately prevails on the merits, FinCEN could begin to enforce the CTA. At that point, “reporting companies” that hadn’t yet filed before the deadline could end up scrambling to complete their filing.

If you have concerns about future enforcement of the CTA and the status of your filings, please contact your Larkin Hoffman attorney to discuss your options