CTA Compliance After Texas Top Cop Shop

What should you be doing?

In Conroe, Texas - a northern suburb/exurb of Houston - you will find Texas Top Cop Shop.

According to their Facebook page, Texas Top Cop Shop provides “tactical gear and apparel for police, fire, EMT, military, and the general public.”

This may have little relevance to you. But, what should have significant relevance to you is that Texas Top Cop Shop just provided some tactical gear and weapons against the beneficial ownership information (BOI) reporting obligations imposed by the Corporate Transparency Act (CTA). This came in the form of a preliminary injunction, issued on December 3, 2024 by the U.S. District Court for the Eastern District of Texas.

Cta V Garland District Court Opinion Preliminary Injunction

756KB ∙ PDF file

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I have embedded the Court’s 79-page opinion above, but here is the central holding:

Having determined that Plaintiffs have carried their burden, the Court GRANTS Plaintiff’s Motion for a Preliminary Injunction. Therefore, the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.

Now, this is not the first challenge to the CTA. Attempts were made to challenge the constitutionality of the CTA in District Courts in both Alabama and Oregon earlier this year. The former was successful, but the outcome only applied to members of the plaintiff, the National Small Business Association. Contrast this outcome with Texas Top Cop Shop, under which the preliminary injunction purportedly applies to all reporting companies nationwide.

What’s Next?

If you follow me or read my newsletter, you may have seen my advertisements for my upcoming Symposium on December 12. One of the sessions was going to be on the Corporate Transparency Act - in particular, updated reports. But, when seeking CLE credit I built in a contingency whereby I would discuss any legal challenges that affect enforceability of the CTA prior to the December 12 program date.

Well, guess what? The contingency occurred.

So, while I cannot offer CLE credit in all states, I can offer you an update on this ruling and how it impacts you so that you can better inform your clients. On December 12 at 1:15 pm EST/10:15 am PST, I will discuss the impact of this decision. Importantly, I will address what you should be doing before year-end - including any guidance that presumably is forthcoming from FinCEN between now and then.

If you are interested in this program, you can register here. Note that the title and copy for this program has not yet been updated, and what you should focus on is the following:

This program will present alternate paths – one with the learning objectives listed below, but another contingent path to address the state of the Corporate Transparency Act if, at the time of the program, the law has been altered or delayed by judicial decision or other administrative action.

And, if you would like to bundle this with an update on the new SECURE Act Regulations, there is a bundle discount. And to further sweeten the pot, attendance is free for all paid subscribers - monthly or annual - to my newsletter. (So, you could technically sign up for a month, get the CLE, and then cancel - a deal I was initially reluctant to give you.) If you sign up for a subscription between now and then, you will get a promotional code in the confirmation e-mail you receive. And, if you are a current paid subscriber, the promotional code can be found after the paywall below (or at the bottom of this e-mail if you are reading this as an e-mail).

I hope to see you on December 12th, to give you the latest on CTA compliance!

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