Eastern District of Texas Court Blocks the Corporate Transparency Act and the Beneficial Owners Information Reporting

On December 3, 2024, the Federal court of the Eastern District of Texas issued a preliminary nationwide injunction against the Beneficial Owner Information (BOI) reporting requirements of the Corporate Transparency Act (CTA).

The court concluded that the CTA is likely unconstitutional as it is outside of Congress’s power, because the reporting rule implemented the CTA, it is also likely unconstitutional for the same reason. Therefore, neither the CTA, nor the reporting rule may be enforced, and reporting companies need not comply with the January 1, 2025, BOI reporting deadline.

However, the court’s order is a preliminary injunction only and not a final decision. Companies must carefully evaluate their next steps regarding the CTA as the court’s order is a temporary pause of the enforcement of the CTA and the BOI reporting. Enforcement may resume pending further order of the court.

Boyer and Ritter will continue to monitor the case and provide updates as they become available. The case in reference is Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-cv-00478, 12/3/24.