On Tuesday, in a 79-page decision describing the Corporate Transparency Act (“CTA”) as “quasi-Orwellian,” the United States District Court for the Eastern District of Texas issued a nationwide injunction of the CTA ruling that “neither [the CTA nor its regulations] 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.”
In short, the filing obligations of the CTA have been temporarily halted. This applies both to initial filing requirements, as well as obligations to update previously filed information of a reporting company and its beneficial owners. Importantly, this decision is a temporary one until the underlying merits of the case – whether the CTA is constitutional or not – can be decided or the injunction is lifted.
Will the CTA Return?
The future of the CTA is uncertain. The CTA could be restored in its current state, or it may be ruled, in whole or in part, unconstitutional.
What Should Reporting Companies Do Now?
The best thing reporting companies can do now is stay informed. Some reporting companies may choose to continue conducting analysis and collecting information required by the CTA to be prepared in case the injunction is lifted. FinCEN continues to accept filings while the injunction is in place.
What If I Already Filed?
While the injunction is in place, you will not need to report any changes in the information previously filed for a reporting company or its beneficial owners.
Carmody will continue to track this and other cases challenging the CTA.
If you have any questions, do not hesitate to contact a member of our Corporate & Business Services team.