BREAKING: Federal Court Enjoins Government from Enforcing Corporate Transparency Act
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction that enjoins the federal government from enforcing the Corporate Transparency Act (the CTA).
The CTA, which went into effect January 1, 2024, requires 鈥渞eporting companies鈥 in the United States to disclose information about their beneficial owners — the individuals who ultimately own or control a company — to the Treasury Department鈥檚 Financial Crimes Enforcement Network (FinCEN).
A group of six plaintiffs filed a lawsuit in May 2024 claiming that Congress exceeded its authority under the Constitution in passing the CTA. In a 79-page order issued by United States District Judge Amos L. Mazzant, the Court found that the plaintiffs were likely to succeed on the merits of their claims and, although the plaintiffs sought a preliminary injunction on behalf of only themselves and their members, the Court issued a nationwide injunction instead.
The Court鈥檚 order states that neither the CTA nor the implementing rules adopted by FinCEN may be enforced and that reporting companies need not comply with the CTA鈥檚 upcoming January 1, 2025 deadline for filing beneficial ownership reports.
The Court鈥檚 order is a preliminary injunction only and not a final decision. The Court鈥檚 order temporarily pauses enforcement of the CTA on a nationwide basis, but enforcement could resume if the Court鈥檚 order is overturned on appeal or the Government ultimately prevails on the merits.
麻豆传媒 will continue monitoring developments in this area. In the meantime, please contact your 麻豆传媒 attorney with any questions you may have about the matters above or the CTA generally.
