LATE-BREAKING DEVELOPMENT – Court issues nationwide preliminary injunction potentially affecting 12/31/24 BOI reporting deadline

Texas Court blocks the Corporate Transparency Act and may eliminate the requirement to report Beneficial Ownership Interests

The US District Court for the Eastern District of Texas issued a NATIONWIDE preliminary injunction against the enforcement of the Corporate Transparency Act (CTA) on December 3, 2024.  This preliminary injunction potentially affects the December 31, 2024 deadline for companies that existed before 2024 to report beneficial ownership interests (BOI) to the Financial Crimes Enforcement Network (FinCEN). The CTA, if left intact, would require most small to medium-sized businesses created in or registered to do business in the US to report beneficial ownership interests (BOI) to the Financial Crimes Enforcement Network (FinCEN).

In Texas Top Cop Shop v. Garland et al., Judge Mazzant strongly rebuked the CTA for overstepping constitutional boundaries.  Because one of the plaintiffs in the case, the National Federation of Independent Business (NFIB), represents clients nationwide, the court ruled that a nationwide injunction was necessary.

This ruling follows a similar case previously this year, National Small Business United v. Yellen, where a federal district court in the Northern District of Alabama, Northeastern Division, enjoined the Department of Treasury and FinCEN from enforcing the CTA against the plaintiffs in that case.  A notice of appeal has been filed in that case, but as of the writing of this article, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association as of March 1, 2024 are not required to report BOI to FinCEN at this time.

Suggestions for businesses that have not filed with FinCEN and do not wish to file with FinCEN:

Seek legal counsel to evaluate exposure if the injunction is lifted or enforcement resumes.

Consider delaying filing with FinCEN but be prepared for potential compliance if the preliminary injunction is lifted by the judge or the injunction is overturned on appeal.

Stay informed about updates and proceedings in this and other cases which could modify or change the injunction.

NOTE – We will not advise on or assist with BOI reporting preparation.  We recommend that you reach out to your attorney for assistance in this area.