December 6, 2024
By: Kevin Levy and Natali Reyes
On December 3, 2024, a federal district court in Texas ruled that the Corporate Transparency Act (CTA) is likely unconstitutional and preliminarily enjoined its enforcement nationwide (Texas Top Cop Shop, Inc., v. Garland, 2024 WL 4953814 (E.D. Tex. 12/03/2024)). The ruling means that FinCEN cannot enforce the CTA for now, including against individuals and entities required to file under the CTA by year-end (i.e., entities created before January 1, 2024). However, because this is a preliminary injunction and FinCEN will likely appeal the ruling, the situation may change quickly. We are cautioning clients to proactively monitor the situation.
In the interim, FinCEN is still accepting BOI filings, and some clients may choose to continue to file while awaiting the outcome of the case.
PLEASE NOTE two additional points:
1. There is a six-month filing deadline extension applicable to individuals and entities located in certain counties adversely affected by Hurricanes Beryl, Debby, Francine, Helen or Milton. Specific rules apply to these extensions, which should be reviewed in detail to determine applicability.
2. There are various states adopting their own CTA laws, which will avoid the main federal law challenge in the Texas case.
A best practice is to carefully monitor the situation at both the federal and applicable state level for compliance. Please do not hesitate to reach out to our CTA Team for updates and guidance on applicability and/or compliance.
For additional background, please also review our prior Insights titled “Corporate Transparency Act Filing Deadlines Extended for Hurricane Victims”, “Corporate Transparency Act Filing Deadline Fast Approaching for Pre-existing Companies” and “Corporate Transparency Act and the End of Hiding in the U.S.”
Questions?
Contact GrayRobinson Business Law Section Chair Kevin Levy, Attorney Natali Reyes, or a member of the Business Law Section.