A new federal law that would require most LLCs, corporations and partnerships to file disclosures with the Treasury Department, including Beneficial Ownership Information, has been halted by a Texas federal judge. The injunction applies nationwide to all businesses.
On December 3, the United States District Court for the Eastern District of Texas issued an injunction that temporarily blocks enforcement of the Corporate Transparency Act, and thereby suspending its requirement that LLCs, corporations and partnerships file BOI reports through the Treasury Department’s Financial Crimes Enforcement Network.
In the case before the court, Texas Top Cop Shop v Garland et al, several plaintifs file suit claiming that the BOI requirements were unconstitutional. Judge Amos Mazzant found enough cause to issue the injunction, finding that plaintiffs are “likely to succceed on the merits of their claims,” and that allowing enforcement to go forward would cause irreparable harm.
Judge Mazzant stated that issues such as corporate formation are generally left to the states, and as such, Congress likely exceeded its authority in enacting this legislation.
FinCEN has estimated that the cost of BOI reporting for businesses would be an aggregate $22.7 billion in its first year, and $5.6 billion per year thereafter.
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