On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction suspending the enforcement of the Corporate Transparency Act (CTA). 

• Law invalidated less than one month before reporting deadline

• Court says CTA is not a proper exercise of Commerce Clause power

• The CTA cannot be justified under the Necessary and Proper Clause

• It is expected that the government will seek an expedited appeal of the decision and request a stay of the order of the federal district court.

• If overturned by the U.S. Court of Appeals for the Fifth Circuit, pre-2024 Reporting Companies would still be required to file their BOI Report no later than Jan 1, 2025. 

WHAT YOU NEED TO KNOW: Although the nationwide preliminary injunction relieves the immediate obligation to file with FinCEN, it would be wise for non-exempt reporting entities that have not filed their report, to continue to prepare for the filing and gather the information and documents needed and be ready to send if ultimately required.  If either the Fifth Circuit or Supreme Court stay the district court’s order pending appeal, the Reporting Rule will become enforceable again, and the rule’s deadlines will become effective.    

As of the time of this alert’s publication, The Financial Crimes Enforcement Network (FinCEN) is still accepting BOI reports and has not released a statement addressing its approach to the CTA’s enforcement, although a statement may be forthcoming. 

ZLG will continue to monitor this matter.

This client alert is a general UPDATE REGARDING the corporate transparency Act (CTA) nationawide block by texas court. It, therefore, is not intended to be, and should not be construed as, legal advice.

About Zarren Law Group, LLC (ZLG): ZLG is a boutique business transactional law firm primarily consisting of former “big firm” attorneys who are focused on delivering exceptional outcomes by utilizing a results-oriented, value-add approach in solving clients’ complex legal and business-related issues. ZLG primarily concentrates on corporate law, business law, mergers and acquisitions, private placements, public offerings, public company compliance, financings/loan transactions, intellectual property, tax, real estate, and other business transactional matters. For more, visit www.zarrenlawgroup.com.