Yesterday, December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction that enjoins the federal government from enforcing the Corporate Transparency Act (CTA). The Court’s order states, importantly, that reporting companies need not comply with the CTA’s upcoming January 1, 2025, deadline for filing Beneficial Ownership Information (BOI) reports.

Please note that the Court’s order is a preliminary injunction only and is not a final decision. The Court did not make an affirmative finding that the CTA and associated Reporting Rule are contrary to law or that they amount to a violation of the Constitution, only that the CTA should not be enforced while the court challenge is pending because the challengers are likely to succeed. Enforcement of the CTA could resume if the Court’s order is overturned on appeal or the government wins on the merits of the federal case. While it is understandable if clients choose to pause filings in light of the ruling, we recommend that clients do not abandon preparations for eventual compliance. If an appeal is filed and the injunction is stayed or narrowed, clients should ensure they will be in a position to complete their remaining filings on what may be a tight timeline. A stay of the injunction could undo that postponement, and a stay order could come at any time, even close to the deadline.

Due to this uncertainty, for those clients who have asked Pugh Hagan Prahm to complete and file their BOI reports, please continue with completing your BOI worksheet and forwarding a copy of your driver’s license to the appropriate staff person as soon as possible. We will suspend the actual filing of the BOI reports until we have more clarification on the permanency of the Court’s order.

Note that even if a stay is denied and the injunction remains in place, reporting companies are not precluded from proceeding with their filings if they choose, to avoid future uncertainty.

Please pay attention to additional updates and proceedings in this and other cases which could modify or change the Court’s order.