The U.S. District Court for the Eastern District of Texas announced on December 3, 2024 that it would block the federal government, via the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), from enforcing the Corporate Transparency Act (CTA), which was first discussed in our previous post—Corporate Transparency Act Beginning January 1, 2024.
The lawsuit was filed in May 2024, asserting that Congress had exceeded its constitutional authority in passing the CTA. The District Court issued a 79-page ruling, which held the plaintiffs seeking the injunction were likely to succeed on the merits of their claims. The District Court issued the injunction on a nationwide basis, despite the plaintiffs seeking only to enjoin the CTA as applied to their interests.
The District Court’s Order provides that neither the CTA, nor its implementing regulations may be enforced. The Order further provides that reporting companies are not required to comply with the CTA’s impending January 1, 2025 beneficial ownership report filing deadline for companies existing prior to January 1, 2024.
This Order is only a preliminary injunction. It does not represent the District Court’s final and binding decision. The Order temporarily prevents FinCEN from enforcing the CTA until the Order is overturned on appeal or the federal government is able to prevail on the merits—that Congress does possess constitutional authority to pass the CTA.
For now, business entities should continue to monitor the status of this legal challenge to the CTA and reach out to their attorney at Conway, Olejniczak & Jerry S.C. for specific questions.