By attorneys Conner Wasson and Rachel Fritz
The Corporate Transparency Act (“CTA”) went into effect on January 1, 2024, requiring “reporting companies” in the United States to file information about their beneficial owners—the individuals who have substantial control over the company—to Financial Crimes Enforcement Network (“FinCEN”).
On December 3, 2024, a federal judge in the Eastern District of Texas issued a preliminary injunction blocking the enforcement of the CTA and its implementing regulations. This order purports to remove the obligation for reporting companies to comply with the reporting requirements of the CTA which includes the upcoming January 1, 2025 deadline for filing beneficial ownership information reports while the injunction is in effect.
It is important to note that the court’s order is only a preliminary injunction and is not a final decision. The practical effect of this injunction is that it temporarily pauses enforcement of the CTA. The federal government is expected to appeal the court’s order and enforcement could resume at any time if the injunction is overturned.
Reporting companies may need to act quickly if the injunction is overturned to meet the reporting deadlines. We recommend reporting companies work with legal counsel to evaluate their exposure under the CTA if the injunction is lifted or enforcement resumes.
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