Texas Court Issues Temporary Injunction Nationwide on BOI Reporting Requirements

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On December 3, 2024, a Texas-based federal court issued a sweeping order prohibiting the federal government from enforcing the Corporate Transparency Act (CTA) anywhere in the country. Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No. 4:24-cv-478 (E.D. Tex.). The Court held that the CTA—which would have required an estimated 32.5 million companies in the United States as of January 1, 2024, to submit sensitive information regarding their “beneficial owners” (BOI) to the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025—was likely unconstitutional and that its implementation would irreparably harm reporting companies if they were forced to comply. The Court enjoined the CTA’s enforcement nationwide, specifically stating that neither the Act nor its related regulations may be enforced, and that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline[.]”

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Unlike other court decisions that have examined the CTA’s constitutionality, Texas Top Cop Shop explicitly enjoined the CTA nationwide, finding that “[a] nationwide injunction is appropriate in this case.” This means that “[existing] reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline,” and that FinCEN cannot enforce any of the CTA’s penalties for willful noncompliance against entities or individuals.

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The Court’s decision will likely not be the final word on the CTA’s enforceability. To begin, the Court entered only a preliminary injunction, which it could theoretically reconsider at some point in the future. The more likely next step, however, is that the government will immediately appeal this decision to the United States Court of Appeals for the Fifth Circuit. A further appeal could be taken to the United States Supreme Court. But unless a court specifically dissolves the Texas Top Cop Shop injunction, companies will not be required to comply with the CTA’s reporting requirements.

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