By MichaelSilver
On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA) and its implementing regulations nationwide. The court found that the plaintiffs were likely to succeed in their argument that Congress exceeded its constitutional authority in enacting the CTA. As a result, the January 1, 2025, beneficial ownership information reporting deadline has been stayed pending further court order.
The suspended CTA would have required approximately 32.6 million U.S. entities to file reports with FinCEN disclosing detailed ownership information. The court determined that the government failed to demonstrate that the CTA was a valid exercise of Congress’s powers under either the Commerce Clause or the Necessary and Proper Clause of the Constitution. The court found that the CTA improperly attempted to regulate companies’ “anonymous existence” rather than commercial activity.
While this injunction provides temporary relief from the CTA’s reporting obligations, it is important to note that this is not a final ruling on the law’s constitutionality. The government will likely appeal this decision, and similar challenges are pending in other courts. We will continue to monitor developments and provide updates as the situation evolves.
For now, no action is required regarding beneficial ownership reporting under the CTA.
Please contact us at 847.982.0333 if you have any questions about how this ruling may affect you.