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We previously wrote about the Corporate Transparency Act (CTA), which requires most business entities to file a Beneficial Ownership Information Report with the Financial Crimes Enforcement Network (FinCEN) on or before January 1, 2025.  Last week the US District Court for the Eastern District of Texas issued a nationwide preliminary injunction against enforcement of the CTA in the Texas Top Cop Shop, Inc. v. Garland case. 

The six plaintiffs in that case have argued that the CTA is unconstitutional. The court found that the plaintiffs had shown a reasonable likelihood of succeeding on the merits and that the CTA and its implementing regulations likely violate the Constitution as outside of Congress’ authority under the Commerce Clause or its Necessary and Proper Clause.  While the court did not make a final ruling on the constitutionality of the CTA, it nevertheless granted the injunction due to its conclusion that the CTA and related implementing regulations were likely unconstitutional.

The court’s ruling is a preliminary injunction, meaning it did not rule on the constitutionality of the CTA. However, the future of the CTA and its implementing regulations remains uncertain given this lawsuit and other legal challenges. The Department of Justice, on behalf of the Department of the Treasury, filed a Notice of Appeal on December 5, 2024.

FinCEN has stated that “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”  We recommend that business owners that have not yet filed the BOI Report should continue to monitor these matters and be ready to file the BOI Report should the injunction be lifted.

If you have questions relating to the Federal Corporate Transparency Act or the New York State LLC Transparency Act,  contact our business attorneys, Michael F. McConville at mmcconville@mccmlaw.com or 585-512-3520;  Letty Laskowski at llaskowski@mccmlaw.com or 585-512-3538; Amy L. Varel at avarel@mccmlaw.com or 585-512-3506.

This publication is intended as an information source for clients, prospective clients, and colleagues and constitutes attorney advertising. The content should not be considered legal advice and readers should not act upon information in this publication without individualized professional counsel.

About MCCM

McConville Considine Cooman & Morin, P.C. is a full-service law firm based in Rochester, New York, providing high-quality legal services to businesses and individuals since 1979.  With over a dozen attorneys and a full paralegal support staff, the firm is well-positioned to right-size services tailored to each client. We are large enough to provide expertise in a broad range of practice areas, yet small enough to devote prompt, personal attention to our clients.

We represent a diverse range of clients located throughout New York State and New England.  They include individuals, numerous manufacturing and service industry businesses, local governments, and health care professionals, provider groups, facilities and associations. We also serve as local counsel to out-of-state clients and their attorneys who have litigation pending in Western New York courts.  For more information, please contact us at 585.546.2500.