On December 3, 2024, a Texas federal court issued a nationwide preliminary injunction blocking the enforcement of the Corporate Transparency Act (CTA) and its implementing regulations.
Court’s Decision
In Texas Top Cop Shop, Inc., et al. v. Garland, et al., the court granted a motion for preliminary injunction that specifically ruled:
- The CTA improperly regulated incorporated entities irrespective of whether they engaged in commercial activity.
- Congress cannot compel disclosure of information solely for law enforcement purposes under the guise of regulating commerce.
- The CTA is enjoined. Enforcement of the Reporting Rule is also enjoined. Reporting companies need not comply with the CTA’s January 1, 2025 BOI reporting deadline pending further order of the Court.
Implications
This injunction affects an estimated 32.6 million U.S. businesses (which includes community associations) that were required to disclose information regarding their beneficial owners (board members) before January 1, 2025. While the Justice Department has yet to comment, the ruling marks a temporary victory for corporations and privacy advocates concerned about the CTA’s broad reach.
What’s Next?
The case, Texas Top Cop Shop, Inc. v. Garland (E.D. Tex., No. 4:24-cv-00478), will likely see further legal battles as the Justice Department evaluates its next steps.
What Does This Mean?
For now, the preliminary injunction halts the reporting requirements nationwide. This means that associations that have not filed their BOI report are not required to do so by January 1, 2025. Stay tuned for updates as this case develops and what it means for community associations.
Contact your favorite HGCT attorney for additional information.