On December 3, 2024, Judge Sean Jordan of the Eastern District of Texas delivered a seismic ruling in Texas Top Cop Shop, Inc. et al. v. Garland et al., issuing a nationwide injunction that blocks enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information Reporting (BOIR) requirements.

With the January 1, 2025, deadline looming, this decision has sent shockwaves through businesses across the country, offering a moment of reprieve while raising critical questions about what happens next.

The lawsuit was brought by Texas-based small businesses and their owners who argued that the CTA—passed in 2021 to combat money laundering and financial crime—overreaches Congress’ constitutional authority. Specifically, the plaintiffs claimed that requiring businesses to disclose sensitive ownership information infringes on privacy, imposes a disproportionate burden on small businesses, and violates principles of federalism.

In his December 3 decision, Judge Jordan sided with the plaintiffs, stating:

“The CTA’s sweeping reporting requirements are beyond Congress’ enumerated powers and intrude on the sovereignty of states and the privacy rights of citizens.”

Judge Jordan’s ruling applies nationwide, effectively freezing the CTA’s implementation just weeks before its January deadline. Businesses that have been working overtime to prepare their BOIR filings are now in a gray area, caught between a court injunction and the possibility of swift legal appeals.

The CTA represents one of the most significant federal transparency laws in decades. Under FinCEN’s final rule, corporations, LLCs, and other reporting entities are required to disclose their “beneficial owners”—individuals who own or control at least 25% of the company—to help root out illicit financial activity.

But the law has not been without its critics. Small business advocates have long argued that the reporting requirements impose undue compliance costs, particularly on smaller companies that lack the resources to navigate complex regulatory demands. Judge Jordan’s injunction is a major win for these groups, but it’s not the end of the story.

FinCEN and the Department of Justice are expected to appeal the decision, and they may seek a stay of the injunction, which could reinstate the January 1 deadline. A court higher up the chain—such as the Fifth Circuit Court of Appeals—could overturn or narrow the ruling. In short, businesses should not assume this reprieve is permanent.

For businesses across the country, this injunction creates both relief and uncertainty. With January 1, 2025, still officially on the books as the CTA’s compliance deadline, companies should stay cautious and proactive. Here’s what they need to consider:

1. Stay Ready, Stay Flexible: While the injunction halts enforcement for now, it could be lifted or modified at any time. Businesses should continue gathering the necessary information for their BOIR filings so they timely and accurately comply with this new law if the deadline is reinstated.

2. Watch for Updates from FinCEN: FinCEN is likely to respond soon, either through a public statement or by pursuing an appeal. Businesses should closely monitor FinCEN’s guidance and consult with legal counsel to stay informed.

3. Weigh the Risk of Filing Early: Some companies may decide to submit their BOIRs despite this injunction just to stay safe and enjoy the holidays. Others might choose to delay filing while keeping their compliance materials ready. There’s no one-size-fits-all answer—companies should assess their risk tolerance. 

4. Don’t Let Your Guard Down: Even if the injunction holds for months, businesses should treat this as a temporary pause, not a full stop. Waiting until the eleventh hour could leave companies scrambling during the holidays if the original deadline comes back. 

As one compliance expert put it:

“This is a reprieve, not an escape hatch. Businesses that hit pause entirely may find themselves far behind the curve if the rules are reinstated.”

Legal experts predict this case could escalate quickly, with appeals moving through the courts in the coming weeks. The injunction’s nationwide scope increases the urgency for FinCEN and the DOJ to respond. Given the weight of the CTA’s transparency goals—and the broader implications for financial regulation—the federal government is unlikely to let this ruling stand without a fight.

In the meantime, businesses must prepare for all scenarios. Companies that proactively gather their beneficial ownership information will be in the best position to adapt, no matter how the courts ultimately rule.

The December 3 ruling in Texas Top Cop Shop temporarily halts enforcement of the Corporate Transparency Act’s reporting requirements, creating a welcome pause for many businesses. But this injunction is far from the final word. FinCEN’s next move—and the outcome of any appeals—could change the legal landscape at a moment’s notice.

It is anticipated that FinCEN will issue a statement soon, clarifying its position in light of the court’s ruling. Until then, companies should decide whether to (i) proceed with filing their BOIRs as planned or (ii) delay filing while ensuring they’re prepared to comply quickly if the injunction is overturned.

The takeaway is clear: Don’t let your guard down. This pause may be temporary, but it does not mean these filing requirements have gone or will go away any time soon. 

Need help with the Beneficial Owner Information Report with FinCEN?

Contact Della Torre Law PLLC