Yesterday marked a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act reporting requirements.
The Corporate Transparency Act (CTA) went into effect January 1, 2024. It mandated that all beneficial owners of entities filed with the Secretary of State, such as LLCs and Corporations, report private information with the Financial Crimes Enforcement Network (FinCEN). This information includes full legal names, birth dates, current addresses, and copies of drivers’ licenses. All businesses in place prior to 2024 initially had until January 1, 2025 to complete the filing. All businesses created in 2024 were given 90 days from the creation of the business to submit the filing. Beginning in 2025, all businesses created were going to have just 30 days from the date of creation to send in their information.
The National Federal of Independent Business (NFIB), along with its thousands of members, were a party to the case Texas Top Cop Shop, Inc., et all v. Garland, et al. that was brought in the U.S. District Court for the Eastern District of Texas. In this case, NFIB requested a preliminary injunction, which would put a temporary stop to the reporting requirements. The NFIB argued that the CTA is unconstitutional as it exceeds Congress’s authority over the states, and because it violates the First and Fourth Amendments. The Court granted the preliminary injunction on December 3, 2024, and applied the block to the entire nation.
The NFIB is also involved in many more cases throughout the country, including in the U.S. Supreme Court. As such, this decision may be the first of many with a similar outcome.
So, what does this mean for you?
If you are a business owner that fell under the reporting requirements of the CTA, whether as an existing business or a new business started this year, your deadline has now been postponed. Although it is too soon to tell, there is a good likelihood that the CTA reporting requirements will be shut down entirely.
Durnell Maier Law will continue to track updates on the CTA reporting requirements. If any of our clients are impacted by any future decisions, we will keep you informed.