By: Shur Erdenekhuu and Trevor Stapleton

On Tuesday, December 3, 2024, Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued a nationwide injunction, blocking enforcement of the Corporate Transparency Act less than a month from the January 1, 2025 enforcement date. The order, while providing immediate relief, still raises questions and uncertainty for business owners across the country.

The Corporate Transparency Act was passed in 2021 under authority of the Constitution’s Commerce Clause and requires “beneficial owners” to file personal information with FinCEN, a subagency of the Department of Treasury. In response, impacted business owners and legal experts raised constitutional validity concerns relating to the Act’s far-reaching compliance requirements. Until last Tuesday, these constitutional concerns went judicially unaddressed at a nationwide level. The Department of Justice, on behalf of the Department of Treasury, has already filed a Notice of Appeal.

What Now?

As the Act’s constitutionality continues to be ligated, compliance requirements remain in limbo. In response to the recent order, FinCEN released an alert indicating that beneficial owner filings are now voluntary, and individuals who choose not to file while the injunction remains in effect are not subject to liability. FinCEN has yet to comment on whether the deadline will be extended past January 1, 2025, in the event enforcement is affirmed.

To find out how this ruling may impact you and your business, contact an attorney today.