On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction temporarily blocking enforcement of the Corporate Transparency Act (CTA). This decision, part of the case Texas Top Cop Shop, Inc. v. Garland, challenges the CTA’s constitutionality under the Commerce Clause, arguing it exceeds Congressional authority. The CTA mandates millions of U.S. businesses disclose their “beneficial owners” to FinCEN, aimed at combating money laundering and financial crimes.
Judge Amos L. Mazzant III’s ruling labeled the CTA “likely unconstitutional” for requiring disclosures without clear ties to interstate commerce. For now, this injunction halts enforcement of the CTA, including its Beneficial Ownership Information (BOI) reporting requirements. However, businesses may still submit BOI filings voluntarily while the case proceeds.
What’s Next for the CTA?
This injunction pauses mandatory compliance but does not strike down the law entirely. FinCEN may appeal, and related cases, such as one in the 11th Circuit Court of Appeals, could influence the CTA’s future. The broader debate centers on federal power versus regulatory agency limits, with potential implications for other transparency laws.
What Should Businesses Do?
For now, businesses have temporary relief from enforcement but should monitor developments closely. The injunction could be overturned or modified, requiring rapid compliance with reporting requirements.
Contact Burkhalter Law to stay informed and ensure your business remains prepared for potential regulatory changes.
Resources:
Bloomberg Tax
Texas Top Cop Shop, Inc. v. Garland
Beneficial Ownership Information Report
JUSTIA US Law
