The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc., et al. v. Garland, U.S. Attorney General, which enjoined the CTA, 31 U.S.C. § 5336, enjoined enforcement of the Reporting Rule, 31 C.F.R. 1010.380, and stayed the compliance deadline under § 705 of the APA (Administrative Procedure Act 5 U.S.C. § 705). The Court held that neither the Reporting Rule,31 C.F.R. 1010.380, or the compliance deadline under § 705 of the APA may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI (Beneficial Ownership Information) reporting deadline pending further order of the Court.
The FINCen BOI website notes the appeal filed on March 11, 2024, in the U.S. Court of Appeals for the 11th Circuit in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.). In that case, a final declaratory judgment concluded that the Corporate Transparency Act exceeded the Constitution’s limits on Congress’s power and enjoined the Department of the Treasury and FinCEN from enforcing the Corporate Transparency Act against the plaintiffs in that case.
Until the decision in Texas Top Cop Shop, it seemed best to have companies formed before January 1, 2024, file their initial BOI by the January 1, 2025 deadline. The Texas Top Cop Shop decision indicates that reporting companies do not need to comply with the January 1, 2025 deadline. However, be aware that the nationwide preliminary injunction could be lifted or other court action could impact the filing requirement. Click here for client communication language for this new development.
Stay aware of developments in this area! As always, if there are any questions, please feel free to contact us at OBLIC. We’re here to help!
See OBLIC Resources on CTA
Corporate Transparency Act Launches January 1, 2024
OBLIC Alert – Your Hotline Questions: CTA
CTA Update: 90-Day Reporting Deadline
CTA Update: Additional Resources
Current Developments: CTA…Don’t Miss Updates: CTA and Non-Compete
If you have any questions or concerns related to this ruling, please contact OBLIC’s experienced Loss Prevention attorneys for assistance.
| Gretchen K. Mote, Esq. Director of Loss Prevention Ohio Bar Liability Insurance Co. Direct: 614.572.0620 [email protected] |
Merisa K. Bowers, Esq. Loss Prevention Counsel Ohio Bar Liability Insurance Co. Direct: 614.859.2978 [email protected] |
This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.
