Federal Court Issues Temporary Injunction Blocking Enforcement of Corporate Transparency Act

December 5, 2024

The United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction on December 3, 2024, blocking the federal government from enforcing the Corporate Transparency Act (“CTA”).

The CTA, which went into effect January 1, 2024, required all non-exempt companies to file a Beneficial Ownership Information Report (“BOIR” or “BOI Report”) with the U.S. Financial Crimes Enforcement Network (“FinCEN”), disclosing certain information about the beneficial owners of the company. Such information included the beneficial owner’s name, date of birth, residential address, and information from (including an image of) a government-issued identification document.

The CTA was met with pushback and several lawsuits challenging the federal government’s authority to collect and store the requested information, culminating in the ruling out of Texas this week by U.S. District Court Judge Amos L. Mazzant. The case is: Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-478 (E.D. Tex. Dec. 3, 2024).

Prior to this injunction, reporting companies formed or registered before January 1, 2024, were required to file the BOIR by December 31, 2024.

While this injunction blocks the federal government from enforcing the CTA or penalizing companies for non-compliance, it is worth noting that the injunction is a temporary order subject to appeal. Companies should continue to monitor the status of the CTA and cases related to its enforcement, as any appeal and subsequent ruling could come quickly. Our team will continue to monitor this situation and share updates as they develop.

Carolyn Lavin DeVaughn is an Associate Attorney with Gross Shuman P.C. She concentrates her practice in the areas of corporate law, banking and finance, and estate planning. Carolyn works with businesses across a wide range of industries on all aspects of their business operations. She also works closely with clients on securing the funding to complete complex commercial real estate purchases, loans, and refinancing agreements. You can reach Carolyn at 716-854-4300 ext. 242 or [email protected]