CTA Enforcement Temporarily Halted: Federal Court Issues Nationwide Injunction – December 2024 Update
On December 3, 2024, a United States District Court for the Eastern District of Texas issued a nationwide, preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). The plaintiffs in the underlying case argued that the CTA regulations are unconstitutional because they violate the Ninth and Tenth Amendments of the U.S. Constitution by intruding on states’ rights, violate the First Amendment by compelling speech, and violate the Fourth Amendment by forcing disclosure of private information.
Because this was a hearing for a preliminary injunction, the court did not reach a final determination regarding the constitutionality of the CTA . However, the Court concluded that plaintiffs satisfied the prerequisites for a preliminary injunction and temporarily enjoined enforcement of the CTA and its Beneficial Owner Information Reporting (BOIR) Rules. On December 23rd the government filed an appeal of the court’s preliminary injunction to the United States Court of Appeals for the Fifth Circuit. On December 26th, the Court directed that the injunction shall remain in effect. At the moment, the requirements for filing BOI reports under the CTA are on hold, but may be reinstated after a hearing on the merits of the case or an appeal to the United States Supreme Court.
MPO will continue to monitor the proceedings and will keep our clients informed of their obligations. In the meantime, MPO will continue to file BOI reports for clients who have already asked us to file on their behalf. If you do not want us to file the BOIR please let us know immediately (however waiting may not give us enough time to file on your behalf should the stay be lifted in the future). If you have not filed a BOI report for your company, we recommend that you do so, or that you engage MPO to do so. We do not know if or when the injunction will be lifted, and, if it is lifted, how long companies will have to file reports. Therefore, out of an abundance of caution, we recommend that BOI reports be filed, despite the injunction. If you have questions about this situation, please contact your individual attorney at MPO.
