On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the Corporate Transparency Act (CTA), citing concerns about its constitutionality and its significant burden on small businesses. The ruling, part of Texas Top Cop Shop v. Garland, highlighted the act’s potential overreach into areas traditionally regulated by states, posing broader questions about federal authority.

The CTA, enacted in 2021 to combat financial crimes, requires businesses to disclose beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). However, compliance costs—estimated to exceed $22 billion in the first year—prompted legal challenges. The plaintiffs argued that the act violated First and Fourth Amendment rights by mandating extensive data disclosures from approximately 32.6 million business. 

Judge Amos Mazzant’s decision blocks enforcement nationwide.

For businesses, this means the January 1, 2025, compliance deadline is on hold. Those business that have not filed their BOI reports are not currently required to do so, but this may change depending on future rulings or policy shifts. Uncertainty remains as the decision is likely to be appealed.

PMTA will continue monitoring developments and provide members with updates on potential implications.