Corporate Transparency Act Blocked By Federal District Court As Reporting Deadline Approaches

A Federal District Court has placed a preliminary nationwide injunction on the Corporate Transparency Act (CTA), stating that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

Corporate Transparency Act

The CTA established to assist the government in it’s anti money laundering efforts. The CTA requires many U.S. entities to disclose personal information about individuals that own or control an entity. While there are exemptions for entities to report their Beneficial Owner Information (BOI), it is estimated that 32.6 million companies would have to report under the CTA.

Reporting deadlines varied depending on when the entity was established as follows:

• Entities created or registered before 2024 must file their initial CTA reports by January 1, 2025.
• Entities created or registered in 2024 must file their initial CTA reports within 90 days of creation or registration.
• Entities created or registered in 2025 or later must file their initial CTA reports within 30 days of creation or registration.
• If there are any updates or corrections to previously reported information, updated or corrected reports must be filed within 30 days.

The Court’s decision

In Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.), the court “determined that the CTA and Reporting Rule are likely unconstitutional” but “has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution.” Thus the court issued a preliminary injunction preventing the government from enforcing the CTA and it’s compliance deadline pending further order from the court.

Treatment of CTA obligations going forward

The legal community believes it’s likely that this is not the last that we hear about the enforcement of the CTA. The decision by the Court was just a preliminary injunction that could be potentially reconsidered at some point, and that the government will most likely appeal this decision. Any potential reversal of the preliminary injunction will reinstate the CTA, including the filing deadlines.

Actionable item

This article is not intended to provide any legal advice and UHY does not provide services related to CTA or the CTA’s BOI reporting requirements. We strongly encourage you to contact your legal counsel to ascertain the impact of the preliminary injunction on your company’s BOI reporting requirements.