CORPORATE TRANSPARENCY ACT REPORTING TO FINCEN SUSPENDED.
By Avery Chapman
On December 3, 2024, Federal District Court Judge Mazzant of the Eastern District of Texas granted a preliminary injunction, to be applied nation-wide, enjoining the United States from requiring any state’s domestic companies from having to report their beneficial owners to FINCEN under the Corporate Transparency ACT (“CTA”). In granting the injunction, the Court found that the Reporting Rule, 31 C.F.R. 1010.380, and the Corporate Transparency Act, 31 U.S.C. § 5336, are both “likely unconstitutional” and that Plaintiffs demonstrated the substantial irreparable harm, by being required to report their beneficial ownership. The Court also found that the powers delegated to Congress did not support the creation of the CTA’s Reporting Rule. This case is in its initial stages, and the merits of this particular case have not been decided, so it remains to be seen whether the nation-wide injunction will be permanent, but for now, beneficial ownership reporting under the CTA to FINCEN is enjoined. See Texas Top Cop Shop, Inc. v. Garland, Case No. 4:24-cv-000478-ALM (E.D.Tx Dec. 4, 2024) at ECF 30. See Comment and Order here.
Mr. Chapman is former two term Chair of the Electronic Discovery and Digital Evidence Committee of the Florida Bar Business Law Section, a member of the Civil Rules and Computer Law and Technology Committees, and a member of the Professionalism Committee of the Palm Beach County Bar Association. He can be reached through www.chapmanlawgroup.net