On Tuesday, December 3, 2024, a federal district court in the Eastern District of Texas, issued an order granting a nationwide preliminary injunction that prohibits the Corporate Transparency Act (CTA) from enforcement of the statute and regulations that implements its beneficial ownership information reporting requirements, and, specifically stays all deadlines to comply with the CTA’s reporting requirements [Texas Top Cop Shop, Inc., et al. v. Garland, et al., No. 4:24-cv-00478 (E.D. Tex.)]. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.
Texas Top Cop Shop is only one of several cases in which plaintiffs have challenged the CTA that are pending before courts around the country. Several district courts have denied requests to enjoin the CTA, ruling in favor of the Department of the Treasury. The government continues to believe, consistent with the conclusions of the U.S. District Courts for the Eastern District of Virginia and the District of Oregon, that the CTA is constitutional.
While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.
“In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force,” FinCEN said in a statement posted on its website. “However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”