A Federal Court in Texas has issued a ruling that temporarily stops the Federal Government from enforcing the Corporate Transparency Act (the “Act”) and requiring the filing of Beneficial Ownership Interest Reports (BOIRs) with FinCEN.

The Hon. Amos L. Mazzant of the U.S. District Court for the Eastern District of Texas ruled on December 3, 2024 that the U.S. Congress lacked authority to require people to make these filings, and that the Act’s requirement that beneficial owners of entities organized before 2024 must file BOIRs by January 1, 2025 causes an imminent risk the people’s rights under the U.S. Constitution will be irreparably harmed. See Texas Top Cop Shop, Inc. v. Garland, No. 4:24-cv-478 (E.D. Tex. Dec. 3, 2024).

Judge Mazzant’s opinion revisits libertarian and states’-rights arguments to hold the Act as unenforceable, reasoning that Congress infringed unjustifiably on states’ rights to regulate the formation of business entities because the Act does not truly regulate interstate commerce, relate to an underlying tax obligation, or regulate foreign affairs. This ruling may stand but will no doubt be appealed, and a final decision on these arguments may occur sometime from now.

Judge Mazzant’s injunction has effect nationwide. While this decision temporarily suspends the obligation for beneficial owners to file a BOIR, we expect the Federal Government to appeal this ruling quickly, and another court may reinstate the Act’s BOIR filing obligation.

We will continue to advise our clients on the filing obligations in case the Act is reinstated, and we are available to consult with you on your potential BOIR filing obligations.