On December 3, 2024, the United States District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, finding that the Corporate Transparency Act (“CTA”) was likely unconstitutional (click here for our prior client alert with more information about the CTA).
The trial court’s order included a nationwide injunction that bars enforcement of the CTA and effectively suspends all filing deadlines and reporting requirements thereunder for all companies in the United States indefinitely.
This means that companies do not have to comply with the CTA for the time being. However, the Government has appealed the order, and further action by the trial court or the Fifth Circuit Court of Appeals could dissolve or modify the trial court’s injunction, in which case the CTA, and all associated reporting requirements, may come back into effect with little advance notice.
Accordingly, although filing BOI reports is not currently legally required, companies should nonetheless consider doing so in order to not be caught off guard if this injunction is lifted and the CTA goes back into effect at some point in the future. FinCEN has stated that it will continue to accept voluntary BOI reports, while also expressly acknowledging that companies are not under a legal obligation to file reports while the Texas injunction remains in effect.
In either case, all companies need to pay close attention to developments with respect to this and other CTA litigation, as the current injunction could be lifted or modified at any time. Please regularly check our website and other sources of news, because although we may post an update if this injunction is modified or lifted, our firm cannot individually notify all prior and current clients if the CTA goes back into effect.
Brandon Jones focuses his practice on helping individuals and business owners in a number of capacities. In addition to his trust and estates work, a significant portion of Brandon’s practice also consists of assisting small business owners and entrepreneurs with all aspects of ownership and operation, including business formation, management, contract drafting and negotiation, business succession planning, and mergers and acquisitions. If you have any questions about these topics or other business law matters, please feel free to contact Brandon (336-478-1160, bkj@crlaw.com) or another member of Carruthers & Roth’s Business team.