December 4, 2024
Corporate Transparency Act - Federal District Court Halts Enforcement Nationwide
This insight provides a brief update on recent litigation regarding the Corporate Transparency Act (CTA) and its reporting requirements. It is not intended to, and does not, provide legal, compliance or other advice to any individual or entity. For an advisory regarding the CTA generally, please refer to our previous insight posted on the website from November 13, 2024.
On December 3, 2024, the US District Court for the Eastern District of Texas granted a nationwide preliminary injunction prohibiting the federal government from enforcing the CTA, its implementing regulations and its reporting deadlines. See Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.).
As a reminder, the CTA requires a reporting company to file a report with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which contains specified information regarding itself and its beneficial owners. The CTA’s implementing regulations provide that each reporting company must file its initial FinCEN report (i) by January 1, 2025, in the case of reporting companies formed or registered to do business prior to January 1, 2024, (ii) within ninety days following formation or registration, in the case of reporting companies formed or registered to do business during 2024, and (iii) within thirty days following formation or registration, in the case of reporting companies formed or registered to do business on or after January 1, 2025.
In the Texas Top Cop Shop case, the US District Court Judge Amos L. Mazzant issued a nationwide preliminary injunction preventing the enforcement of the CTA and its reporting requirements, including the compliance deadlines.
Reporting companies who have not filed a FinCEN report to date are questioning the effect of the preliminary injunction. As of December 4, 2024, the CTA’s reporting requirements are unenforceable. However, it is important to note that the preliminary injunction only temporarily enjoins enforcement of the CTA and is subject to appeal and further procedural developments. If and when an appeal may be filed, and the timing and outcome of an appeal, are all uncertain. Developments may happen quickly or without advance notice, and any changes may or may not include an extension to the deadlines specified by the CTA. A reporting company with questions should seek legal counsel regarding CTA compliance.
December 4, 2024
Corporate Transparency Act - Federal District Court Halts Enforcement Nationwide
This insight provides a brief update on recent litigation regarding the Corporate Transparency Act (CTA) and its reporting requirements. It is not intended to, and does not, provide legal, compliance or other advice to any individual or entity. For an advisory regarding the CTA generally, please refer to our previous insight posted on the website from November 13, 2024.
On December 3, 2024, the US District Court for the Eastern District of Texas granted a nationwide preliminary injunction prohibiting the federal government from enforcing the CTA, its implementing regulations and its reporting deadlines. See Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.).
As a reminder, the CTA requires a reporting company to file a report with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which contains specified information regarding itself and its beneficial owners. The CTA’s implementing regulations provide that each reporting company must file its initial FinCEN report (i) by January 1, 2025, in the case of reporting companies formed or registered to do business prior to January 1, 2024, (ii) within ninety days following formation or registration, in the case of reporting companies formed or registered to do business during 2024, and (iii) within thirty days following formation or registration, in the case of reporting companies formed or registered to do business on or after January 1, 2025.
In the Texas Top Cop Shop case, the US District Court Judge Amos L. Mazzant issued a nationwide preliminary injunction preventing the enforcement of the CTA and its reporting requirements, including the compliance deadlines.
Reporting companies who have not filed a FinCEN report to date are questioning the effect of the preliminary injunction. As of December 4, 2024, the CTA’s reporting requirements are unenforceable. However, it is important to note that the preliminary injunction only temporarily enjoins enforcement of the CTA and is subject to appeal and further procedural developments. If and when an appeal may be filed, and the timing and outcome of an appeal, are all uncertain. Developments may happen quickly or without advance notice, and any changes may or may not include an extension to the deadlines specified by the CTA. A reporting company with questions should seek legal counsel regarding CTA compliance.
