On December 3, 2024, U.S. District Judge Amos Mazzant in Texas issued a nationwide injunction halting the enforcement of the Corporate Transparency Act (CTA).
Prior to the injunction, the Corporate Transparency Act (CTA) would have required most U.S. corporations, limited liability companies (LLCs), and similar entities to report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN).
Judge Mazzant ruled that the CTA likely oversteps federal authority, infringing upon states’ rights as protected by the Tenth Amendment. He described the law as an “unprecedented” federal intrusion into areas traditionally managed by state governments, particularly the regulation of entities formed under state laws. This decision arrives just weeks before the CTA’s compliance deadline of January 1, 2025, creating uncertainty for businesses preparing to meet the new reporting requirements.
The court’s order concluded by stating that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court,” i.e., the order delayed the reporting deadline indefinitely and enjoined enforcement of the CTA throughout the United States. This nationwide injunction provides franchisees who have formed entities relief from the compliance requirements for the time being.
Franchisees and other business owners should, however, stay informed about the status of the Act moving forward, as the injunction may be appealed, and enforcement of the CTA could begin again if the order is overturned, and there is no guarantee that previously mandated reporting deadlines will be extended.
*NOTICE: This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.