On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in Texas Top Cop Shop, Inc. et al. v. Garland, halting the nationwide enforcement of Beneficial Ownership Information (BOI) reporting under the Corporate Transparency Act (CTA). This decision has paused the January 1, 2025, deadline, leaving many business owners wondering what’s next.

‍

What the Ruling Means for Business Owners

The ruling temporarily exempts all business entities—including those already formed and newly created—from submitting BOI reports. For those who have already filed, no further action is required for now. Businesses that have yet to file face two options:

1. Wait until the legal challenges are resolved.
2. File now in anticipation that the requirement may be reinstated later.

While FinCEN has not issued any updated guidance, the preliminary injunction creates significant uncertainty. The government is expected to appeal this decision to the Fifth Circuit Court of Appeals, with a potential for further escalation to the Supreme Court.

‍

Why the Ruling Was Made

Judge Amos L. Mazzant determined that the CTA likely exceeds Congress’s constitutional authority under the Commerce Clause. The ruling also highlighted the “irreparable harm” caused by the burden of compliance, both financially and in terms of privacy concerns under the First and Fourth Amendments.

‍

What Comes Next

The case is part of a larger legal battle, with another pending case, National Small Business United v. Yellen, also challenging the BOI reporting requirement. Both cases are advancing through conservative-leaning courts, increasing the likelihood of a pro-plaintiff outcome.

‍

What Should Business Owners Do?

While the ruling provides temporary relief, business owners should still be prepared. If the injunction is overturned, the filing requirement will be reinstated, and penalties of up to $10,000 may apply for non-compliance.

‍

SnapFile is here to help. Our platform streamlines BOI filing, offering a secure, efficient, and affordable way to meet compliance requirements if and when they are enforced.

Stay tuned for updates as this legal situation evolves. Feel free to subscribe for relevant updates to stay informed.