Corporate Transparency Act Enforcement Halted by Federal District Court

Important Update: On December 26, 2025, the Fifth Circuit granted a stay of the injunction. Accordingly, enforcement of the CTA has resumed.

On December 3, 2024, a Federal District Court Judge in the Eastern District of Texas held that the Corporate Transparency Act (“CTA”) is unconstitutional and issued a nationwide preliminary injunction against its enforcement. Accordingly, reporting companies will not currently be required to comply with the CTA or its January 1, 2025, reporting deadline until further Court actions.  

As a result of this injunction, reporting companies who have a deadline of January 1, 2025, are not presently required to file. While the case specifies the January 1, 2025, reporting deadline, the court enjoined enforcement of the full CTA as well as the reporting rule under 31 CFR 1010.380, which appears to effectively enjoin the enforcement of any reporting requirement.

FinCEN issued an alert on its website on December 9, 2024, advising that due to the injunction, reporting companies are not currently required to file these reports and will not be subject to liability if they do not file while the injunction is in place. Reporting companies may continue to file on a voluntary basis. The Department of Justice (DOJ) filed an appeal in the Fifth Circuit Court of Appeals on December 5, 2024. 

On December 11, 2024, the DOJ requested an emergency stay of the order to allow enforcement of the CTA in the Eastern District of Texas. That request to stay the order was denied on December 17, 2024. On December 13, 2024, the DOJ also filed a request to stay the order with the Fifth Circuit and requested a ruling on the motion by December 27, 2024. The Fifth Circuit has accelerated the appeals process and may rule on more than the request to stay the injunction by December 27, 2024.

The CTA is broad legislation that requires any reporting company, whether foreign or domestic, to file a report detailing its beneficial ownership information if it was formed through the filing of documents in any state or U.S. jurisdiction. The law went into effect on January 1, 2024, for reporting companies formed in 2024. Those companies have been required to file a beneficial ownership information report within 90 days of formation. Under the regulations, reporting companies formed before January 1, 2024, were given until January 1, 2025, to file their initial beneficial ownership information report. This requirement has been estimated to impact more than 32 million companies.  

The case is Texas Top Cop Shop Inc., et. al. v. Garland et. al. A previous case, National Small Business United v. Yellen, also ruled the CTA was unconstitutional on March 1, 2024, but limited its relief to only the named plaintiffs of that case. The government is likely to appeal the decision and may request an expedited decision given the nationwide injunction. 

Our professionals are following the CTA very closely. Watch for further information.