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On December 3rd, less than one month before the January 13th deadline for the filing of initial Beneficial Ownership Reports (“BOI Report”) required by the Corporate Transparency Act (“CTA”), a Federal Court in Texas issued a preliminary injunction applicable nationwide, halting enforcement of the reporting requirements under the law.
In his opinion in Texas Top Cop Shop, Inc. v. Garland, Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas found that the plaintiffs had met the burden of showing that the CTA is likely unconstitutional, and in light of the irreparable harm that would be faced by the plaintiffs and potential “Reporting Companies” nationwide, enjoined the enforcement of the CTA’s reporting requirements. In the opinion, Judge Mazzant III noted that the CTA seeks to compel disclosure of information about companies for law enforcement purposes, which he deemed had been demonstrated by the plaintiffs to be an impermissible leveraging of the Constitution’s Commerce Clause.
Despite issuing this preliminary injunction, the Court has made it clear that it has not made an affirmative finding that the CTA and its reporting requirements are contrary to law or that they amount to a violation of the Constitution.
An appeal has already been filed by the government following this decision. The current ramification of this injunction is that companies do not need to comply with the CTA and make a BOI filing as long as, the injunction is in place. If the Injunction is lifted in 2024, the filing deadline could be reinstated for December 31st or extended.
If you have previously filed there is nothing more that will need to be done on your part. If you have not already filed, we encourage you to have all relevant information readily available to file as this injunction may/can be lifted at any time.
You still have the option to file. KVLSM will be watching the response to this decision closely and will provide immediate updates should any become available.
