A federal court judge has just issued a nationwide injunction against the enforcement of the Corporate Transparency Act (CTA) which is a good step in the right direction.
Via Forbes:
In Texas Top Cop Shop v Garland et al. ( case 4:24-cv-00478 December 3, 2024) , the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA), questioning its constitutionality and its impact on small businesses. The CTA, enacted as part of broader anti-money laundering efforts, mandates companies to disclose their beneficial ownership information to a federal database maintained by the Financial Crimes Enforcement Network (FinCEN).
Judge Mazzant’s opinion strongly rebuked the CTA for overstepping constitutional boundaries. He noted that corporate regulation has traditionally fallen within the states’ jurisdiction. By mandating federal oversight of corporate ownership, the CTA disrupts the balance of power foundational to the U.S. federalist system. Furthermore, the court found that the act burdens businesses with significant compliance costs—projected to exceed $22 billion in the first year alone—without clear safeguards against misuse of collected data.
🚨BREAKING: Federal Court Halts Corporate Transparency Act Reporting Requirements 🚨
Unless and until an appellate court overrules or narrows this decision, small businesses are not obligated to comply with the CTA reporting mandates.https://t.co/xkZsHdrgFd pic.twitter.com/Kob1yVmQE9
— U.S. Chamber (@USChamber) December 4, 2024
The real problem with the law is it does little to solve the problems it purports to solve while saddling millions of small businesses with one more regulatory hurdle to overcome.
We believe the judge made the right decision in this case and look forward to the court ultimately invalidating the entire thing.