Temporary Suspension of Corporate Transparency Act “Beneficial Ownership” Filings under Nationwide Injunction

Founders, investors, directors, trustees and other ultimate beneficial owners of U.S. legal entities are the targets of the federal Corporate Transparency Act (CTA) of 2021.  The CTA requires state and tribal governments to collect personal information through beneficial ownership reports (“BOIR”) of all legal entities established or operating under local or tribal law, effective January 1, 2024.  Generally, first reports are due by December 31, 2024.  The Financial Crimes Enforcement Network of the U.S. Department of Treasury has issued a pamphlet on “Beneficial Ownership Interest” disclosure requirements under the CTA.  This applies to 25% owners, directors and persons in “substantial control.”

Preliminary Injunction.  In a lawsuit challenging the constitutionality of the CTA, one federal court issued a nationwide preliminary injunction on December 3, 2024, suspending enforcement.  See Texas Top Cop Shop, Inc. v. Garland, USDC ED Texas, Civil Action No. 4:24-CV-478.   The Texas court said “the CTA appears likely unconstitutional,” considering “the Federal Government is not equipped with a federal police power to regulate all aspects of public life.” Slip Opinion, at p. 33.

Be On the Alert.  This was only a preliminary nationwide injunction.  If you own or control any U.S.-organized companies that do not file beneficial ownership reports due to this injunction, you should track further developments on a monthly basis to avoid risks of substantial penalties. If you need help, please let us know.  This notice is not legal advice.