On December 3, 2024, in the case of Texas Top Cop Shop, Inc. et al. vs. Garland, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction which prevents the U.S. Treasury Department and its Financial Crimes Enforcement Network (FinCEN) from enforcing the Corporate Transparency Act (CTA) against all companies nationwide.
Please note that this is not a decision on the merits of the case, but merely a ruling granting a preliminary injunction. While one other Federal District Court has held that the CTA is unconstitutional and cannot be enforced, three other Federal District Courts have held that the CTA is constitutional and may be enforced. On December 5, 2024, the U.S Treasury Department filed a notice of appeal to the Fifth Circuit Court of Appeals.
Based on the current preliminary injunction, our recommendation is to suspend all CTA filing activity until the preliminary injunction is either overturned or stayed (suspended). In the event that the preliminary injunction is either overturned or stayed, it is not clear whether the December 31, 2024, filing deadline for companies formed before 2024, the 90 day filing deadline for companies formed during 2024, or the 30 day deadline for companies formed after 2024 will be extended. A notice issued by FinCEN confirms that companies are not required to file their CTA reports, and will not be subject to liability for failure to file, while the preliminary injunction remains in effect.
If your company has already filed its CTA report with FinCEN, this preliminary injunction does not affect you. If your company has not yet filed its CTA report, we recommend that you continue to gather the information necessary to file in the event that the preliminary injunction is overturned or stayed.
If you have any questions, please contact Edmund G. Kauntz at [email protected] or Nathaniel D. Tucker at [email protected] or via telephone at 216-292-5807.
