Beneficial Ownership Information: Court Issues Nationwide Injunction

The federal Corporate Transparency Act (CTA) went into effect on January 1, 2024, and is intended to combat financial crimes, such as money laundering. Under the CTA, a company that qualifies as a “reporting company” is required to report certain information about its “beneficial owners” to the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury (the Department). For all nonexempt entities established before this year, the reporting deadline is set for January 1, 2025.

The constitutionality of the CTA has long been debated. Yesterday, less than a month before the filing deadline, a federal district court in Texas issued a preliminary nationwide injunction, halting the Department from enforcing the reporting requirements. With the court action being a preliminary injunction, the federal government is restricted from enforcing the CTA until further order of the court.

This means that existing reporting companies are not required to comply with the January 1, 2025, deadline, and the 90-day deadline for companies formed in 2024 is also halted. Further, the Department is restricted from enforcing penalties for noncompliance.

The attorneys at Dvorak Law Group continue to monitor guidance and legal authority concerning the CTA and are ready to advise you and answer questions you may have regarding the CTA.