Nationwide Injunction Halts Enforcement of the Corporate Transparency Act

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). The CTA, enacted in 2021, mandates that certain business entities disclose their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) to combat illicit financial activities. The court's decision, citing constitutional concerns, halts these reporting requirements just weeks before the January 1, 2025, compliance deadline.

In response, the U.S. Treasury Department has appealed the ruling, asserting the CTA's constitutionality and emphasizing its role in enhancing financial transparency. Currently, FinCEN has indicated that compliance with the CTA's reporting requirements is voluntary pending further legal developments.

Under the CTA, most corporations, limited liability companies (LLCs), and similar entities are required to report beneficial ownership information. However, certain entities are exempt, including:

• Large Operating Companies: To qualify for this exemption, a company must:

  • Employ more than 20 full-time employees in the U.S.

  • Have an operating presence at a physical office within the U.S.

  • Filed a federal income tax return in the previous year demonstrating more than $5 million in gross receipts or sales.

Given the evolving legal landscape, it's crucial for businesses to stay informed about their obligations under the CTA. For personalized guidance on how this ruling may affect your company, contact the attorneys at Ament Law Group, P.C. Our experienced team can help you navigate these complex legal developments and ensure your compliance with applicable laws.