Texas Court Issues Nationwide Preliminary Injunction Staying Corporate Transparency Act Reporting

On December 3, in Texas Top Cop Shop, Inc., et al. v. Garland, et al.¹ (Texas Top Cop), a federal court in the Eastern District of Texas imposed a nationwide preliminary injunction blocking the CTA and staying compliance with the January 1, 2025, reporting deadline. CTA reporting and enforcement of the CTA is now stayed until further notice. Reporting companies do not need to file a beneficial ownership report. Treasury has publicly stated that it continues to believe in the constitutionality of the CTA and is evaluating next steps.

In Texas Top Cop, the plaintiffs, a group of small businesses and the National Federation of Independent Business, challenged the CTA on multiple constitutional grounds, arguing that the CTA’s reporting requirements impose an undue burden on small businesses. Judge Amos Mazzant’s decision in Texas Top Cop is the first CTA decision to provide temporary relief for all parties nationwide.

There are a number of other pending cases challenging the constitutionality of the CTA, including cases in Maine, Massachusetts, Oregon, Michigan, and Ohio. In March of this year, in National Small Business United v. Yellen,² a federal court in the Northern District of Alabama granted the plaintiffs’ motion for summary judgment and enjoined the government from enforcing the CTA against the plaintiffs. Notably, unlike the Texas Top Cop order, that injunction is limited to the plaintiffs in that case. The government appealed the decision, and oral arguments were held in the 11th Circuit on September 27, 2024.

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These legal challenges underscore the current debate over the CTA and the potential for ongoing changes. O’Melveny & Myers will provide updates as circumstances evolve. We can help with any questions you may have about the CTA. Feel free to contact our team of experts. 

¹Texas Top Cop Shop, Inc., et al. v. Garland, et al., E.D. Tex., Case No. 4:24-cv-00478-ALM.
²National Small Business United v. Yellen, N.D. Ala., Case No. 5:22-cv-1448-LCB.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Tracie Ingrasin, an O'Melveny partner licensed to practice law in New York; Garrett Johnston, an O'Melveny partner licensed to practice law in New York and Texas; AnnaLou Tirol, an O'Melveny partner licensed to practice law in California and the District of Columbia; Wenting Yu, an O'Melveny partner licensed to practice law in California and New York; Martin Mayo, an O'Melveny counsel licensed to practice law in California; and Connor Corbitt, an O'Melveny associate licensed to practice law in Texas, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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