Corporate Transparency Act Enforcement Halted by Nationwide Injunction

Washington, D.C. (December 4, 2024) - On December 3, 2024, Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas granted a request for a nationwide preliminary injunction preventing the federal government from enforcing the Corporate Transparency Act (CTA) and its implementing regulations. The injunction stays the new law’s compliance deadline of January 1, 2025, for all reporting companies.

Previously, a judge in the Northern District of Alabama entered a final declaratory judgment declaring the CTA unconstitutional, but limited the remedy to enjoining enforcement only against the plaintiffs in that case (members of the National Small Business Association at the time of the ruling). That case is currently pending before the U.S. Court of Appeals for the Eleventh Circuit. The new decision is the first ruling with nationwide application.

This is not a final decision of the court and is subject to appeal. The injunction can be lifted or a final decision can be entered in the case, which will require compliance with the CTA. Eligible reporters under the law should continue to monitor developments to determine if compliance is again required.

For more information on this decision and its implications, contact the author of this Alert or any member of the firm’s Administrative Law & Regulatory Practice or Corporate Practice.

Author:

Rosario Palmieri, Partner

Editor:

Jane C. Luxton, Managing Partner - Washington, D.C.