Federal Court Blocks A Reporting Requirement For Small Businesses

This week, the U.S. District Court for the Eastern District of Texas issued a temporary injunction blocking the U.S. Department of Treasury from enforcing the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirement. 

The CTA, which went into effect on January 1, 2024, mandates that companies submit information about individuals who own or have at least 25 percent ownership interest in that company. This information would include their names, dates of birth, residential addresses, and a unique identifying number from a government-issued ID such as a driver’s license or passport, along with an image of the document. A business who did not submit this information would be at risk of fines and criminal penalties.

A lawsuit filed by the National Federation of Independent Businesses (NFIB) argues that these reporting requirements were a harmful invasion of small business owners’ privacy, as well as a misuse of their time. Additionally, the lawsuit suggests that the CTA is unconstitutional as it oversteps Congress’s powers over the states, improperly mandates speech, and disregards the First Amendment right to anonymous association.

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