Business Owners Relieved from the Expensive and Time-Consuming Burden of Filing Beneficial Ownership Information
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a decisive nationwide preliminary injunction, effectively barring the federal government from enforcing the Corporate Transparency Act (CTA). This case is Texas Top Cop Shop, Inc., et al. v. Garland et al.
The CTA, which became effective on January 1, 2024, mandates that “reporting companies” in the United States disclose critical information about their beneficial owners—the individuals who ultimately own or control a company—to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
In May 2024, six plaintiffs filed a lawsuit, asserting that Congress overstepped its constitutional authority in enacting the CTA. In a comprehensive 79-page order, United States District Judge Amos L. Mazzant recognized the strength of the plaintiffs’ case, declaring they were likely to succeed in their claims. Despite the plaintiffs seeking a preliminary injunction for themselves and their members, the court took the significant step of issuing a nationwide injunction.
The court’s ruling clearly states that neither the CTA nor the implementing rules by FinCEN can be enforced, and reporting companies are not obligated to meet the upcoming January 1, 2025, deadline for filing beneficial ownership reports.
It is crucial to understand that this court order is a preliminary injunction—not a final ruling. This decision effectively pauses enforcement of the CTA nationwide, but enforcement could resume if the injunction is overturned on appeal or if the government ultimately prevails in this case.
RJC
Note: Judge Mazzant, was nominated by Pres. Barack Obama on June 26, 2014 and confirmed by the Senate on December 16, 2014, and received commission on December 19, 2014.
For the Courts Opinion see: https://www.cir-usa.org/wp-content/uploads/2024/05/cta-v-garland-district-court-opinion-preliminary-injunction.pdf
