Texas US District Court Strikes Down CTA (NY Lawyer News)

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act (CTA) and its implementing regulations124. The court's decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al. concluded that the CTA is likely unconstitutional as it exceeds Congress's constitutional authority.

Key Points of the Court's Decision
Unconstitutionality: The court determined that Congress likely exceeded its legislative powers when enacting the CTA, characterizing it as "quasi-Orwellian".

Nationwide Injunction: The court applied the injunction nationwide, not limited to the plaintiffs.

Compliance Suspension: Reporting companies are not required to comply with the CTA's January 1, 2025, beneficial ownership information (BOI) reporting deadline pending further court orders.

Constitutional Concerns: The court viewed the CTA as a threat to the system of federalism, potentially setting a dangerous precedent for federal control over companies.

Implications
The injunction halts the enforcement of both the CTA and its implementing regulations across the country.

An estimated 32.5 million companies in the United States are affected by this decision2.
The ruling comes just weeks before the proposed year-end filing deadline, providing relief to many small business owners concerned about government overreach.

This decision represents a significant development in the ongoing debate over the constitutionality and implementation of the Corporate Transparency Act.