Breaking News: Federal Court Pauses Enforcement of Corporate Transparency Act

Posted on Dec 5, 2024 by

The U.S. District Court for the Eastern District of Texas has issued a preliminary injunction halting the enforcement of the Corporate Transparency Act (CTA). The CTA mandates that most businesses disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). In its ruling, the Court found that the plaintiffs are likely to succeed on the merits of their claim – that Congress exceeded its constitutional authority when passing the CTA.

The Court’s order clarifies that both the CTA and the accompanying reporting rules issued by FinCEN cannot be enforced at this time. As a result, businesses are not required to meet the CTA’s January 1, 2025, deadline for submitting beneficial ownership reports.

It is important to note that this decision is a temporary, preliminary injunction, not a final ruling. The Court has not yet determined whether the CTA is unconstitutional or invalid. Enforcement of the CTA could resume if the Court’s order is overturned on appeal or if a final judgment is issued in favor of the plaintiffs.

McCarty will closely monitor updates in this case as it continues to develop. In the meantime, please reach out to your primary McCarty attorney with any questions.

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Sadie E. Dupont

Business & Corporate Law Attorney at McCarty Law LLP
Sadie’s practice is focused primarily on business law matters, such as business formations, contract drafting, and mergers and acquisitions. She has an interest in observing and understanding the interconnectedness of the law with other business elements such as finance, marketing, management, sales, and operations.