Department of Justice Appeal Filed; Reporting Currently by Voluntary Submission Only
On December 3, 2024 Judge Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas issued an order which imposed a nationwide injunction halting the enforcement of The Corporate Transparency Act and its beneficial ownership reporting requirements due by year-end.
The case is Texas Top Cop Shop, Inc. v. Garland, E.D. Tex., No. 4:24-CV-00478. Judge Mazzant determined in the case that the CTA and BOI Reporting Rule are likely unconstitutional for purposes of issuing a preliminary injunction. The Court has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they violate the Constitution. That issue will be decided by trial sometime next year. This is just a temporary halt on CTA compliance by January 1, 2025.
Judge Mazzant ordered that the injunction apply nationwide. Specifically, the Court’s order (1) enjoins the CTA, including enforcement of that statute and regulations implementing its beneficial ownership information reporting requirements, and, (2) stays all deadlines to comply with the CTA’s reporting requirements.
The Department of Justice filed a Notice of Appeal in the Texas Top Cop case on December 5, 2024 and seeks to overturn the injunction or to seek clarification that it is applicable to just the Plaintiffs in the case. However, in the meantime, FinCEN has published a statement that reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports through FinCEN’s direct BOI E-FILING system.
NowackHoward is closely monitoring the developments in this CTA challenge and how the ultimate ruling may impact the CTA filings of Georgia homeowner and condominium associations.
If the filing requirement is reinstated, reporting requires each officer and director to provide their personal identification, which takes time to collect. If the deadline is restored, clients should be ready to file to avoid penalties. If your condominium or homeowners association would like assistance with this or other matters, please reach out to info@nowackhoward.com.
