On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary nationwide injunction against the Corporate Transparency Act, pausing its requirement for filing beneficial ownership information (BOI) reports.

Judge Amos L. Mazzant III ruled that the CTA’s requirements exceed Congress’s authority under the Commerce Clause, effectively halting its implementation. The injunction was issued at the request of a family-run firearms and tactical gear retailer called Texas Cop Shop Inc., among other co-plaintiff businesses. The challenge centered on the law’s application to all incorporated entities, regardless of their commercial activity, which plaintiffs argued is beyond Congress’s regulatory scope.

This decision impacts businesses that have been preparing for the January 1, 2025 deadline. The Department of Justice has filed a Notice of Appeal, which will move the issue to the US Court of Appeals.

What Happens Next?

This preliminary injunction is just the latest legal challenge to the CTA. For example, the Alabama court ruling from earlier this year claiming the CTA is unconstitutional and preventing NSBA members from having to report BOI is still under appeal. Despite the opposition, many industry experts believe that BOI reporting requirements are here to stay. Since Congress enacted the CTA in 2021, it has successfully prevailed against all legal and legislative challenges.

Contrary to some premature suggestions, the CTA is not permanently eliminated. Although the Financial Crimes Enforcement Network (FinCEN) has suspended its Beneficial Ownership Information filing API for the duration of the injunction, it still permits voluntary submissions. Furthermore, FinCEN appealed the decision on December 5, 2024, to the Fifth Circuit Court of Appeals.  If the Attorney General requests a stay of the preliminary injunction during the appeal process, businesses may still be required to file before January 1.

Therefore, businesses must remain prepared to file at a moment’s notice. From a practical standpoint, companies can either complete the filings and move on or continue to exert energy tracking the cases and take some risk along the way. The fees to meet the regulations are nominal. 

Solve Your BOI Reporting Requirement

We continue to help companies with their CTA compliance by collecting their information, monitoring the regulations for them, and processing the filings.  Our full-service support is the easiest way to stay ahead of the requirements. Order BOI Reporting Service today and take advantage of centralized data storage, simple and secure online information collection, automated notifications to keep you updated on ongoing filing requirements, and more.