BREAKING NEWS: CORPORATE TRANSPARENCY ACT PRELIMINARY INJUNCTION

By: Tamara B. Pow, Esq.

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A federal district court in Texas just issued a nationwide preliminary injunction yesterday against enforcing the Corporate Transparency Act (“CTA”) beneficial ownership information reporting requirements. (Texas Top Cop Shop v. Garland (December 3, 2024) U.S. Dist. Ct., Eastern Dist. Of Texas).

The court ruled that Congress exceeded its authority and the Corporate Transparency Act is likely an unconstitutional infringement on states’ rights to regulate businesses. The court granted a nationwide injunction prohibiting enforcement of the January 1, 2025 reporting deadline. “[t]he Court has determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction. It has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution.”

This is only a preliminary injunction and the opinion will likely be appealed. For now, any non-exempt business that has not yet filed a Beneficial Ownership Information Report needs to decide whether to (a) continue with the filing or (b) put it on hold until we get more information and continue to closely monitor this and other decisions for developments.

This blog is written as of December 2024. Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites. 

All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations.  No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation.

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