Posted on December 5, 2024

Preliminary Injunction: a temporary court order that prevents someone from continuing alleged harmful or unlawful activities or commanding them to act in a certain manner before a final judgment is issued.

A federal judge has issued a preliminary injunction aka stop on the government’s enforcement of the Corporate Transparency Act on December 3, 2024.

In the case against the government in the United States District Court Eastern District of Texas, the judge heard arguments requesting that the court enjoin or legally stop the government from continuing to enforce the CTA and its reporting requirements.The plaintiffs are also challenging the constitutionality aka legality of the law under the first, fourth, fifth, and ninth amendments of the Constitution.

Under the motion granted, reporting companies no longer have to comply with the January 1, 2025 deadline. While the 2025 deadline is not the only filing deadline under the CTA, it is not far fetched to conclude that mandatory compliance under the CTA is suspended until further notice.

The case is not over and the court has not determined whether the CTA is unconstitutional. So, there is still a chance that the CTA will live on and require compliance in the future once the injunction is lifted or the case is heard.

What does this mean for you?

Well, if you are a domestic or foreign reporting company (LLC or Corporation), then you need to keep a close eye on this case because the case is not over.

Right now, there is an injunction, which can still be lifted. If the injunction is lifted or overturned, then you will need to comply with CTA again.

Until the CTA is found to be unconstitutional, it is a wait and see for when compliance with the CTA will begin again.

In the meantime, no BOI Reports are required to be filed until further notice. Stay tuned.