On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction temporarily halting enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) reporting requirements.
In the case Texas Top Cop Shop, Inc. v. Garland, the court found the CTA likely unconstitutional, citing Congress overstepped its legislative powers. The court criticized the CTAâs broad disclosure requirements as âquasi-Orwellianâ and ruled that its obligations were not justified under the Constitutionâs Commerce Clause or Necessary and Proper Clause.
For context, the CTA required millions of U.S. companies to report sensitive ownership data to FinCEN by January 1, 2025, to combat money laundering and other crimes. Non-compliance would have resulted in civil and criminal penalties.
For now, businesses are not required to file BOI reports by the January 1, 2025, deadline. This includes:
Additionally, penalties for non-compliance are on hold, providing immediate relief to businesses navigating regulatory complexities.
The federal government is expected to appeal this decision, potentially to the Fifth Circuit Court of Appeals or the Supreme Court. While the injunction is in place, compliance requirements remain suspended, but enforcement could resume abruptly if the ruling is overturned.
If you have questions about this development or wish to complete the reporting requirements despite the injunction, please contact us.
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