To:  Clients and Friends of Fox Swibel Levin & Carroll LLP

Please be aware that on December 3, 2024, a Texas-based federal court issued a broad order prohibiting the federal government from enforcing the Corporate Transparency Act (CTA). In its ruling on Texas Top Cop Shop, Inc., et al. v. Garland, et al., the Texas federal Court held that the CTA was “likely unconstitutional as outside Congress’ power.” The Court enjoined the CTA’s enforcement nationwide and the enforcement of its related regulations. Making a finer point on its ruling, the Court stated that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline.”

The Court’s ruling will likely be appealed to the Fifth Circuit and potentially the United States Supreme Court. If an appeals court specifically lifts the injunction issued in Texas Top Cop Shop ruling, reporting companies would then be required to comply with the CTA’s reporting deadlines. Because of this, we still advise that companies continue to seek guidance from counsel regarding the applicability of the CTA and to gather required beneficial ownership information in preparation for such a potential outcome.

If you have any questions about the CTA and this development, please contact David Morris ([email protected]) or Marcus Lind-Martinez ([email protected]). Thank you.

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances.  Under applicable rules of professional conduct, this content may be regarded as attorney advertising.