Corporate Transparency Act and Reporting Requirement Enjoined
Texas Top Cop Shop v Garland et al. ( case 4:24-cv-00478)
On December 3, 2024, the U.S. District Court for the Eastern District of Texas granted a preliminary injunction (a/k/a temporary based on the likelihood of success on the merits) nationwide that stops the Federal government from enforcing the Corporate Transparency Act (CTA). This is not a final decision but is good for small businesses now because it relieves them of the reporting responsibilities due at the end of the year/start of 2025. IT ALSO ENJOINED/STAYED THE REPORTING RULE or the BOI form as we have come to call it—for now.
This is a 79-page order by the judge and granted further relief than the plaintiffs requested. The plaintiffs requested relief only for themselves and the judge, instead, went nationwide injunction with his ruling.
Recall, that while Ultima was a nationwide injunction regarding individually owned 8(a) being “deemed” socially disadvantaged by the regulations—not the statute—and the individually owned had to provide a social narrative (case still not closed out) like they used to do to qualify.
In contrast, in a later decision, involving the DOT/DBE regulations, another federal judge declined to issue a national injunction citing to the opinions of current Justices on the US Supreme Court that trial judges should refrain from issuing national injunctions while citing Ultima and breaking with it. He decided that case only on for litigants in front of him.
This may be appealed to the Fifth Circuit.
What does this mean moving forward—this is a preliminary decision that may be reversed and the consequences for not reporting are severe—both civil and criminal. Many companies are complete or nearly complete with the work required to perform. This is not a bad move considering this is a preliminary and not a final decision on this issue with a new administration about to take office.