The Bottom Line
A nationwide preliminary injunction against the Corporate Transparency Act (CTA) was given by Judge Amos L. Mazzant, III of the U.S. District Court for the Eastern District of Texas.1
The CTA requires the reporting of certain information identifying individuals who ultimately own or otherwise control certain entities to the Financial Crimes Enforcement Network (FinCEN). The database is intended to assist FinCEN and other permitted agencies to protect U.S. financial interests from illicit activity hidden behind shell companies or other complex ownership structures.
In March 2024, a federal district court held the CTA unconstitutional and prohibited its enforcement against the plaintiffs in the case of National Small Business United v. Yellen. The U.S. Department of Justice has appealed the ruling and FinCEN issued a notice stating that while the plaintiffs were not required to provide BOI reports, the organization would still enforce the provisions of the act for others.
This injunction from Judge Mazzant is different though, applicable to all reporting companies nationwide. “And, as the Government states, the Court cannot provide Plaintiffs with meaningful relief without, in effect, enjoining the CTA and Reporting Rule nationwide,” Judge Mazzant stated, “the extent of the constitutional violation Plaintiffs have shown is best served through a nationwide injunction.”2
How We Can Help
Forvis Mazars is monitoring the impactful ruling and will provide updates as more information becomes available. CTA reporting rules are not part of the Internal Revenue Code and more of a legal matter, therefore we recommend companies contact legal counsel for assistance. Professionals at Forvis Mazars are available to assist with general questions concerning the requirements and can help direct you to available resources. Please contact us if we can be of additional help.