Texas judge ends BOI reporting requirement

That federally mandated “beneficial ownership information” (BOI) report you have been putting off? Don’t worry about it. In the United States District Court for the Eastern District of Texas, Sherman division, has issued a nationwide preliminary injunction ruling that “reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.” The court concluded that the Corporate Transparency Act (CTA) is likely unconstitutional. 

The court’s issuance of a preliminary injunction blocks the U.S. Department of Treasury from enforcing the BOI reporting requirements. The case was titled Texas Top Cop Shop, Inc. et al. v. Merrick Garland, Attorney General of the United States, et al.

The National Federation of Independent Business issued a statement in support of the ruling: “The BOI reporting requirements are a harmful invasion of small business owners’ privacy and a misuse of their valuable time. Thankfully, the Court agreed and granted a preliminary injunction, giving small business owners a reprieve from this burdensome rule,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center.

A lawsuit filed by NFIB called the CTA unconstitutional and an act of Congressional overreach extending beyond their power. The lawsuit also asserted the BOI reporting requirements violated both the First and Fourth Amendments, as it violated freedom of speech by mandated reporting and forced small businesses to share private information.

“This ruling is a huge victory for small businesses nationwide, and just in time,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “For many Main Street small businesses, they were a mere four weeks away from the deadline to file their information in accordance with the CTA. The BOI reporting requirements are a harmful invasion of small business owners’ privacy and a misuse of their valuable time. Thankfully, the Court agreed and granted a preliminary injunction, giving small business owners a reprieve from this burdensome rule.”

This preliminary injunction is subject to a further hearing and a final determination of the court. A case in Alabama federal district court from earlier this year (National Small Business United v. Yellen) found the CTA unconstitutional but it limited enforcement to the plaintiffs in that case. This new ruling from the Texas court is national and applies to all U.S. businesses. 

While the Department of Justice under the Biden administration could appeal the ruling, it is unlikely to reach a new determination before a new administration is in place. The Trump administration is highly unlikely to pursue an appeal, with its deregulatory aspirations. This could be the end of CTA mandates at a federal level, though some state governments are considering their own requirements.