On Dec. 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the Corporate Transparency Act (CTA). If upheld, the court’s action would prevent the application of the CTA to entities throughout the country (in contrast to an earlier grant of summary judgment by a district court in Alabama that only applied to the plaintiffs in that case).

The CTA requires each reporting company to report specified beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Department of the Treasury. For companies formed prior to 2024, their report is due no later than Jan. 1, 2025. Companies formed in 2024 must report within 90 days of formation.

As of this writing, FinCEN has not commented on yesterday’s decision, but an appeal seems likely. There has been no indication that FinCEN will stop accepting online reports for those companies that choose to file.

Key takeaway

The federal court granted a nationwide preliminary injunction against enforcement of the Corporate Transparency Act. Porter Wright is actively monitoring the case and any response from FinCEN. Clients that choose not to file based on the preliminary injunction should be prepared to file promptly if the terms of the injunction are altered.

If you have any questions regarding the CTA, please contact Jack Beeler, Jim Mattimoe, Sue Cliffel or Diana Jia.