Government enjoined from enforcing the Corporate Transparency Act
On December 3rd, the United States District Court for the Eastern District of Texas issued an injunction enjoining enforcement of the Corporate Transparency Act (the “CTA”), ruling that it is likely unconstitutional. The CTA requires many (probably most) companies to make detailed disclosures regarding their owners to the Federal Government. For entities formed before January 1, 2024, those disclosures were required to be made by December 31, 2024. Penalties for failure to timely file could be severe. To the relief of many, filing by December 31st
(or at all) is optional for now. While the order staying the CTA is preliminary, the Judge expressed significant doubt that a final order would be any different. If that’s the case, it will require the Fifth Circuit Court of Appeals, reportedly one of the most conservative appeals courts in the Federal Judiciary to overturn the ruling. Absent that, an appeal to the Supreme Court would be necessary. That said, it is likely to be at least months or years before filings are required under the CTA again, if ever.