The U.S. District Court for the Eastern District of Texas (the “Court”) has issued a nationwide preliminary injunction temporarily halting the enforcement of the Corporate Transparency Act (the “CTA”).
As a result, the Court has stayed the requirement for reporting companies to file beneficial ownership information reports until further order.
The injunction is preliminary only and not a final ruling. While the injunction halts enforcement of the CTA, the Court’s order could be overturned on appeal or if the government prevails on the merits.
Effective January 1, 2024, the CTA mandates that “reporting companies” disclose certain information about their “beneficial owners”, certain individuals who own or control a company, to the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).
The lawsuit, filed in May 2024, challenged the constitutionality of the CTA. Based on the plaintiffs’ arguments, the Court has determined that the CTA is likely unconstitutional and thus issued the nationwide preliminary injunction.
We will continue monitoring updates. Please contact your Manning Fulton attorney if you have any questions.
