The Corporate Transparency Act (CTA) took effect this year requiring entities to provide FinCEN and the Department of the Treasury with certain required information about Control Persons and Beneficial Owners of each entity. Entities in place as of December 31, 2023 had until January 1, 2025 to comply and newly formed entities in 2024 had 90 days after formation to comply.

On December 3, 2024, in the case of Texas Top Cop Shop, Inc. v. Garland, U.S. District Judge Amos Mazzant of the Eastern District of Texas issued a nationwide preliminary injunction blocking FinCEN and the Treasury Department from enforcing the statutory reporting requirements of the CTA.  In addition, the court issued a stay against the compliance deadline of January 1, 2025, for existing entities.

Specifically, the court held that:
“Having determined that Plaintiffs have carried their burden, the Court GRANTS Plaintiff’s Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

However, this is a preliminary injunction that is subject to appeal. Affected entities have likely already been gathering the required CTA information and preparing for filing by year-end. While this ruling appears to eliminate the current rush to year-end compliance, affected entities should consider staying in touch with their counsel about the full impact of this ruling and for future direction, assuming this case proceeds through the appellate process.

The opinions expressed are those of Oxford Financial Group, Ltd. The opinions are as of date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. The information in this presentation is for educational and illustrative purposes only and does not constitute investment, tax or legal advice. Tax and legal counsel should be engaged before taking any action. OFG-2412-4