In our last issue, we discussed the Corporate Transparency Act (CTA). Please be advised that on December 3, 2024, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop v. Garland. The court ruled that the CTA, which mandates beneficial ownership reporting, is unconstitutional.
Consequently, the compliance deadlines set for December 31, 2024, for existing companies and deadlines for newly formed companies are temporarily suspended. While the injunction is in place, reporting companies are not required to file beneficial ownership reports under the CTA.
The Department of Justice, however, filed a Notice of Appeal on December 5, 2024, and on December 13, 2024, it filed an emergency motion to stay the preliminary injunction pending the appeal. The government has asked for a ruling by December 27, 2004. As such, it is probable that the Fifth Circuit will issue a ruling before the end of the year. If the Fifth Circuit grants a full stay of the preliminary injunction, then the January 1, 2025 filing deadline for reporting companies in existence as of January 1, 2024, will be back in effect nationwide unless FinCEN extends the deadline. In light of this, it is important to either file voluntarily before January 1 or be ready to file before January 1 and pay very close attention to the decisions in this case.