It has been widely reported that a federal district court ruled on December 3rd that the Corporate Transparency Act (CTA) is likely unconstitutional. The Court issued an order halting its enforcement, including the beneficial ownership information (BOI) reporting rule outlined in the CTA’s regulations. The Court stated the injunction should apply nationwide. The cited case is Texas Top Cop Shop, Inc. v. Garland, No. 4:24-CV-478 (E.D. Texas 12/3/24).
As a result of the injunction, the CTA and the BOI reporting rule are not enforceable. The CTA’s January 1, 2025, BOI reporting deadline is on hold until further notice from the Court. This injunction is on appeal. It is also uncertain if the new administration will pursue this new filing requirement.
While the nationwide preliminary injunction temporarily halts enforcement of the CTA, the uncertainty surrounding its fate means companies should be prepared to resume compliance efforts if the injunction is lifted.
Some reporting companies may choose to proceed with compliance efforts despite the preliminary injunction, assuming that it could be modified or overturned at any time. If the injunction is lifted, it is unclear how long reporting companies would have to comply with the BOI reporting requirements and other obligations under the CTA or when the appeal is heard.