Corporate Transparency Act Enforcement Blocked Nationwide

Less than a month before the initial reporting deadline of the Corporate Transparency Act (“CTA”), on December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.), effectively blocking enforcement of the Act nationwide.

The CTA requires “reporting entities” – which includes many U.S. small businesses –  to disclose certain information about “beneficial owners” of their businesses to the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury. The CTA went into effect January 1, 2024, with the reporting deadline for existing reporting entities being January 1, 2025. 

Until either the temporary order is overturned on appeal, or the conclusion of legal proceedings in the case, enforcement of the Act is paused nationwide, with the Court saying in its order that reporting companies need not comply with the CTA’s upcoming January 1, 2025 deadline for filing beneficial ownership reports.

In the wake of the order, FinCEN issued a statement on its website, stating that “reporting companies are not currently required to file 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.”

Contact Attorney Emily Gordon at emily@smart-counsel.com with any questions about the CTA and your company’s reporting obligations.