A federal court in Texas has issued an order that now prohibits the federal government from enforcing the Corporate Transparency Act nationwide. In the Texas Top Cop Shop case brought before the Court this week, the Court held that the Act, which required many small businesses to file a Beneficial Ownership Information (BOI) report with the US Department of Treasury's Financial Crimes Enforcement Network (FinCEN) before January 1, 2025, was likely unconstitutional, and that enforcing the Act would harm reporting companies if forced to comply. As a result, the Court enjoined the enforcement of the Corporate Transparency Act in its entirety nationwide.
The plaintiffs filed suit earlier his year, claiming that Congress exceeded its authority under the Constitution in passing the Corporate Transparency Act. United States District Judge Amos L. Mazzant issued the order, indicating that the Court found that the plaintiffs were likely to succeed on the merits of their claims issued a nationwide injunction in response.
The Court’s decision will likely not be the final decision as to the enforceability of the Corporate Transparency Act. The decision will likely be appealed to the US Fifth Circuit Court of Appeals, and then potentially to the US Supreme Court. However, unless or until a court dissolves the injunction rendered in Texas Top Cop Shop case, companies will not be required to comply with the BOI reporting requirements.
