Federal Court Issues Injunction Suspending Enforcement of the Corporate Transparency Act

December 5, 2024


Client Notice:

Federal Court Issues Injunction Suspending Enforcement of the 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 “reporting companies” in the United States to disclose information about their beneficial owners — the individuals who ultimately own or control a company — to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by filing a Beneficial Ownership Information Report (“BOIR”).

The Court’s 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’s upcoming January 1, 2025 deadline for filing beneficial ownership reports.

The Court’s order is a preliminary injunction only and not a final decision. The Court’s order temporarily pauses enforcement of the CTA on a nationwide basis, but enforcement could resume if the Court’s order is overturned on appeal or the Government ultimately prevails on the merits.

Even with the injunction, a reporting company is not prohibited from submitting a BOIR to FinCEN prior to the court issuing a final order.

The Court’s action creates uncertainty for reporting companies because it does not address when filings would be due in the event that the injunction is lifted or if the government prevails on the merits. Further uncertainty exists due to the pending change in administrations in Washington DC. To provide clarity to the reporting companies Riezman Berger represents, please be advised that we will act as follows:

We are suspending all filings for reporting companies (even for reporting companies for which we have all information necessary to file the BOIR but that have not yet been filed) unless directed by the client in writing (email is acceptable) to proceed to file even with the outstanding preliminary injunction. We are suspending all efforts to obtain any needed information necessary for a BOIR unless directed by the client in writing after the date of this notice.

For newly formed reporting companies, at the time of formation we will attempt to collect the information necessary to file a BOIR but will not file a BOIR unless directed by the client in writing to make the filing.

Please note that Riezman Berger does not provide advice as to the application of these laws to an entity unless we have been expressly engaged to provide such advice.

We will continue to monitor developments in the Texas case. If you have any questions, please contact your Riezman Berger attorney or Riezman Berger generally at 314-727-0101.