Texas Federal Court releases nationwide injunction preventing the enforcement of upcoming deadlines imposed

on businesses under the newly enacted Corporate Transparency Act.

 

As the majority of business owners may be aware, the Corporate Transparency Act (the “CTA) is a new law that went into effect on January 1, 2024. The CTA requires “reporting companies” to submit a Beneficial Owner Information Report detailing its beneficial ownership information to the United States Department of the Treasury Financial Crimes Enforcement Network. While the CTA was originally created in an effort to crack down on money laundering it has attracted some notoriety due to the stiff penalties it imposes for failure to comply, including prison time and fines up to $10,000.00. Any reporting company formed prior to 2024 is required to submit a Beneficial Owner Information Report before January 1, 2025.

 

On Tuesday December 3, 2024, less than 30 days before this looming deadline, the United States District Court for the Eastern District Court of Texas issued a preliminary injunction in the case of Texas Top Cop Shop v. Garland et al. The injunction prevents the federal government from enforcing reporting deadlines for the CTA against businesses all over the nation. For business owners, this means that presently, by order of the Court, businesses are not required to comply with the January 1, 2025, deadline. However, please note that this case is ongoing and that compliance requirements can change at any time.

 

Black McCuskey is monitoring this case and ongoing developments regarding the CTA. To those of our clients that have not filed a Beneficial Owner Information Report to date, we are advising that it is within your discretion whether to file a Beneficial Owner Information Report by the original due date out of an abundance of caution or wait to see the future outcome of this case. Whether you have or have not filed a Beneficial Owner Information Report, please be vigilant for additional notices regarding the status of the CTA and its compliance requirements.

 

If you wish to discuss the CTA further and how it applies to your business, please contact one of our experienced corporate attorneys with any questions.

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