Key Things to Know About Judge’s Injunction Halting the Corporate Transparency Act

The Corporate Transparency Act continues to make waves, most recently with a preliminary nationwide injunction by the U.S. District Court in Texas halting the implementation and enforcement of the act. For now, here are three important things you need to know.

As you may have seen, a U.S. District Court in Texas yesterday issued a preliminary injunction halting (at least for the moment) the implementation and enforcement of the Corporate Transparency Act (CTA) nationwide.

Prior to this ruling, the CTA required roughly 32 million existing business entities to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) before the end of 2024. If you’d like more information, you can read the summary from the National Law Review HERE and the full text of the Court’s decision can be found HERE.

The situation is still developing and more information is expected to be available in the future. For now, here are the main things you need to know:

• The Injunction is Temporary: This ruling is a temporary preliminary injunction, not a final ruling on the merits. It is possible this injunction could be appealed to the Fifth Circuit Court of Appeals or even the Supreme Court. It is also possible that FinCEN and/or Congress could attempt some action on the CTA before the end of the year. Any of these actions could modify/revoke this ruling and alter obligations for applicable entities.
• Current Filing Deadlines won’t be Enforced: Entities existing before 2024 are no longer required to file their BOI reports before 2025 as the Court officially stayed the compliance deadline.
• Don’t File, But Be Ready to File: At this point, it is still possible that the enforcement of the CTA will be reinstated and that applicable entities will have to report. If that happens, we have no way to know what ramp up time businesses will be allowed to file their BOI reports. Therefore, until anything further is announced, the prudent strategy for businesses would be to continue to gather the necessary information and get it ready to file, but don’t actually file anything. Businesses who prepare and wait will be well-situated regardless of what happens next.

If you’d like help preparing the necessary information in case the CTA is reinstated, Isaac Wiles has a CTA portal that will aid in gathering all the information needed (and can file for you if reinstatement happens), as well as attorneys and paralegals in their Business / Real Estate Practice Group ready to further assist. Please reach out to Andrew Allman at aallman@isaacwiles.com if you would like more information on this.