Last week, a federal court issued a preliminary injunction blocking enforcement of the Corporate Transparency Act (“CTA”) nationwide.
According to the Texas Federal Court issuing the injunction:
“the compliance deadline is stayed…and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”
Looking forward, it remains possible that the preliminary injunction will be overturned or lifted in future court decisions.
How Did We Get Here?
Prior to the ruling, the CTA required “reporting companies” to file Beneficial Owner Information (BOI) reports. As defined, reporting companies include most private U.S. businesses. Entities that were formed prior to January 1, 2024, were required to file BOI reports by January 1, 2025. Click here to read more about the CTA.
What’s Next
The Texas Federal Court issued the injunction on the basis that the plaintiffs in the underlying case would likely ultimately prevail in their challenge to the constitutionality of the CTA. As such, the injunction is only preliminary and is not a final adjudication of the constitutionality and enforceability of the CTA.
Future court decisions could overturn the Texas Federal Court or lift the preliminary injunction. Accordingly, reporting entities should stay tuned for additional updates on the CTA. To remain up-to-speed on any future CTA developments, we recommend you subscribe here to receive notifications.
If you have questions about how this news may affect your business, please reach out to a member of our corporate team.
Tom Sowers approaches legal issues from a businessperson’s perspective. A Shareholder at Berman Fink Van Horn, Tom’s practice focuses on representing businesses and their owners in a wide range of transactional matters and legal issues.
Ruari O’Sullivan takes the proactive approach. In working with business owners, he anticipates their issues and puts structures in place to protect their interests.
