CTA Preliminary Injuction

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction against the enforcement of the Corporate Transparency Act (“CTA”) nationwide due to the CTA being “likely unconstitutional as outside Congress’s power.” The CTA requires registered business entities to file Beneficial Ownership information to the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. Pending future court orders, reporting companies need not comply with meeting the January 1, 2025, reporting deadline nor comply with any other aspect of the CTA.

The ruling is unlikely to be the last word of the CTA’s enforceability. The decision is a preliminary injunction onlyand not a final decision, which allows for the court to revisit it in the future. The court ruled that the CTA is only likely to be unconstitutional, but did not rule on whether it truly is unconstitutional. Depending on how the court decides going forward, reporting companies may need to file for the CTA at a later point in time. Until a federal court provides further guidance, companies do not need to report under the CTA or update any previously filed reports.

The CTA applies only if you own interests in a reporting company. A reporting company includes any entity registered with the Wisconsin Department of Financial Institutions or Secretary of State for the state of formation (e.g., Corporation, LLC, LLP). If you have already filed for the CTA, there is nothing you need to do. If you have not filed and were planning to do so before the January 1, 2025, deadline, this ruling permits you to hold off on filing for now.

For questions, please call us at 920-430-1900.