As most of you have probably heard by now, a federal court judge issued a preliminary injunction against the Corporate Transparency Act (CTA) on December 3. The decision, the full text of which can be found here, was published by the U.S. District Court for the Eastern District of Texas and applies nationwide.

In the case Texas Top Cop Shop, Inc., et al. v. Garland et al., the Court granted the Plaintiff's request for a preliminary injunction:

The CTA is likely unconstitutional as outside of Congress's power. Because the Reporting Rule implements the CTA, it is likely unconstitutional for the same reasons. … Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA's January 1, 2025, BOI reporting deadline pending further order of the Court.

This preliminary injunction means that the Treasury Department cannot enforce the CTA, and the January 1, 2025, deadline for reporting beneficial ownership information (BOI) has been suspended. Furthermore, the Court was clear that the injunction was to apply nationwide, which was in the Court's power.

As this is a preliminary injunction, suspending the reporting requirements is temporary and pending the final resolution. This decision has already been appealed, and if the Court's ruling is reversed, the reporting requirements and related deadline could be reversed, meaning compliance would be required. Accordingly, boards should be ready to comply if this happens.

Rest assured, we will continue to monitor the situation and update you as soon as we know more. Please feel free to reach out to us with any questions about the CTA or any other issues you may have.