What happened?

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act’s (CTA) beneficial ownership reporting requirements. While there have been a number of cases brought across the country challenging the CTA, this injunction is the most far-reaching as it applies nationwide. Prior injunctions, such as in National Small Business United, et al. v. Yellen, et al., which was brought before the U.S. District Court for the Northern District of Alabama in November 2022 and later appealed to the United States Court of Appeals for the Eleventh Circuit, applied only to the plaintiffs in the litigation.

What does this mean?

A preliminary injunction is not final and the future of the CTA is simply uncertain. U.S. District Judge Amos Mazzant’s 79-page decision bars the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) from enforcing the reporting requirements of the CTA, including the requirements that reporting companies formed prior to January 1, 2024 file initial beneficial ownership information reports by the January 1, 2025 deadline and that reporting companies formed on or after January 1, 2024 file such reports within ninety days of formation, while the litigation proceeds. Thus, as the litigation continues in Texas and on likely appeal, the possibility for the injunction to be stayed or overturned remains.

What’s next?

Given the uncertainty surrounding the law and the status of the injunction, reporting companies that have not yet filed should continue compliance efforts and be prepared to act quickly to meet deadlines should the injunction be overturned, including preparing necessary BOI report information and documentation for filing.  This advice is based only on the law as it stands right now and takes into account no further developments. As of the date of this Alert, FinCEN and the Treasury Department have not released any statements about the case or the preliminary injunction, and the BOI portal is still open.