The Corporate Transparency Act (“CTA”) and its implementing regulations were preliminarily blocked nationwide by a Texas federal court earlier this week.
This preliminary injunction prohibits the federal government from enforcing the CTA. While this injunction remains in effect, there is no requirement for reporting entities to comply with the CTA, including the upcoming January 1, 2025 deadline for filing beneficial ownership reports for existing entities, as well as any additional filings previously required for new entities formed during 2024 or 2025.
The CTA, enacted January 1, 2021, was intended to address and guard against illegal financing by mandating certain entities (primarily small and medium size businesses) to report “beneficial owner” information to the Financial Crimes Enforcement Center (“FinCEN”).
It’s important to note, however, that this order is only a preliminary injunction, not a final decision. Enforcement could potentially resume based on further court decisions. We do anticipate that FinCEN will issue details regarding the destruction of the current database of CTA reports containing information on reporting entities that either filed already or are in the process of filing.
We’re monitoring the situation closely and will keep you apprised of any updates. In the meantime, feel free to reach out to the Cg Team with questions.