Texas Court Blocks Corporate Transparency Act
A Texas federal court preliminarily blocked the nationwide implementation of the Corporate Transparency Act, which mandates US business entities to report stakeholder information to the Treasury Department.
- The court held that the Corporate Transparency (CTA) was likely unconstitutional and its implementation would irreparably harm reporting companies if enforced.
- The CTA would have required approximately 32.5 million U.S. companies to submit sensitive information regarding their beneficial owners (BOI) to the Treasury's Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.
- Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued the injunction at the request of Texas Top Cop Shop Inc., other co-plaintiff businesses, and the Libertarian Party of Mississippi. The lawsuit argued that the Corporate Transparency Act (CTA) exceeds Congress's powers to regulate interstate and foreign commerce because it applies to incorporated entities irrespective of their commercial activity.
"For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government. Despite attempting to reconcile the CTA with the Constitution at every turn, the Government is unable to provide the Court with any tenable theory that the CTA falls within Congress's power. And even in the face of the deference the Court must give Congress, the CTA appears likely unconstitutional," the judge wrote.
- The government argued that the law's purpose, to combat anonymous shell companies and deter money laundering, terrorism financing, and other illicit economic activities, falls within Congress’s regulatory duties.
- The court's decision is likely not final word on the CTA's enforceability. The court issued a preliminary injunction, which it could reconsider later. More likely, the government will appeal this decision to the United States Court of Appeals for the Fifth Circuit. Further appeals could reach the United States Supreme Court.
Full Ruling
Bloomberg Article / Archive
Forbes Article / Archive
National Law Review Post / Archive
- Do you want more? Subscribe and get No Bullshit GM report straight to your mailbox.
- Follow No Bullshit Bitcoin on Nostr.
- Feedback or news tips? Drop it here.
