Alert: Texas federal court rules against Beneficial Ownership Information enforcement

A Texas federal court ruled earlier this week that the federal government can’t enforce the Corporate Transparency Act anywhere in the country.

The CTA would have required more than 32 million U.S. companies to submit “beneficial ownership information” to the Department of Treasury’s Financial Crimes Enforcement Network by Jan. 1, 2025.

In the Dec. 3 ruling for Texas Top Cop Shop, Inc. vs. Garland, the court said Congress “exceeded its legislative powers when it enacted the CTA.”

The ruling probably isn’t the last on the CTA. The court entered only a preliminary injunction, which means it could reconsider in the future. What’s more likely to happen is that the federal government will appeal the Texas court’s decision with the U.S. Court of Appeals for the Fifth Circuit. The appeal process could go as high as the Supreme Court.

However, for now, companies won’t have to comply with the CTA’s BOI reporting requirements.

If you have questions about the CTA or BOI, reach out to us.