With less than a month before the Corporate Transparency Act’s (CTA) year-end filing deadline, a federal court in Texas issued a nationwide injunction, holding that the CTA falls outside of Congress’ powers to regulate interstate and foreign commerce. This is wonderful news for PRINTING United Alliance member companies and the more than 33 million businesses who were subject to the onerous disclosure rules.
In its ruling, the district court stated the CTA is likely unconstitutional because it creates authority that is outside Congress' power and creates a “new form of federal power.” The judge described the law as a “quasi-Orwellian statute” as well.
The ruling temporarily stops the law that would have required business owners to report and regularly update personal information, known as Beneficial Ownership Information (BOI), to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.
Congress passed the CTA in 2021 to reduce financial crimes such as tax fraud, money laundering, terrorism financing and illicit activity. The Alliance and our good friends at the American Farm Bureau Federation (AFBF), National Federation of Independent Business (NFIB), and the S-Corporation Association, opposed the law claiming it infringes on civil liberties and overreaches federal authority. The Alliance joined coalition letters addressed to Congress pushing for a delay and ultimately, a repeal of the CTA.
The district court ruled in favor of the NFIB. Beth Milito, Executive Director of NFIB’s Small Business Legal Center said,
“This ruling is a huge victory for small businesses nationwide, and just in time. For many Main Street small businesses, they were a mere four weeks away from the deadline to file their information in accordance with the CTA. The BOI reporting requirements are a harmful invasion of small business owners’ privacy and a misuse of their valuable time. Thankfully, the Court agreed and granted a preliminary injunction, giving small business owners a reprieve from this burdensome rule.”
On December 5, FinCEN filed an appeal with the U.S. Court of Appeals for the Fifth Circuit Court to get the injunction lifted. The appeal challenges the court’s decision that the CTA likely exceeds Congress’ constitutional authority. The court is expected to move swiftly to either uphold the injunction, modify its scope, or overturn it. In addition, the new Trump administration may take steps to limit the CTA administratively.
FinCEN posted a notice on its BOI landing page reporting that it would comply with the court order and that covered entities are, for the moment, under no obligation to complete their CTA filings. The site is still open if you want to file voluntarily.
The Alliance welcomes the relief provided by the injunction, and the Government Affairs team and its coalition partners look forward to working with Congress and the new administration to provide a more permanent resolution to this problematic policy.
In this article, Stephanie Buka, Government Affairs Coordinator, PRINTING United Alliance, reports on the nationwide injunction of the Corporate Transparency Act. More information can be found at Business Excellence-Legislation or reach out to Steph should you have additional questions specific to how these issues may affect your business: sbuka@printing.org.
To become a member of the Alliance and learn more about how our subject matter experts can assist your company with services and resources such as those mentioned in this article, please contact the Alliance membership team: 888-385-3588 / membership@printing.org.