A Texas court today issued a nationwide injunction against the Corporate Transparency Act and Beneficial Ownership Information (BOI) reporting. Judge Amos Mazzant of the Eastern District of Texas issued the sweeping ruling in Texas Top Cop Shop, Inc. v Garland; the court’s summary of its 79 page ruling states:
In the matter before the Court, Plaintiffs challenge an unprecedented law known as the Corporate Transparency Act (“CTA”). It represents Congress’s attempt to combat bad actors’ ability to cloak their criminal activities in a veil of corporate anonymity. At its most rudimentary level, the CTA regulates companies that are registered to do business under a State’s laws and requires those companies to report their ownership, including detailed, personal information about their owners, to the Federal Government on pain of severe penalties. Though seemingly benign, this federal mandate marks a drastic two-fold departure from history. First, it represents a Federal attempt to monitor companies created under state law—a matter our federalist system has left almost exclusively to the several States. Second, the CTA ends a feature of corporate formation as designed by various States—anonymity. For good reason, Plaintiffs fear this flanking, quasi-Orwellian statute and its implications on our dual system of government. As a result, Plaintiffs contend that the CTA violates the promises our Constitution makes to the People and the States. 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. Accordingly, the CTA and its Implementing Regulations must be enjoined.
Now, I am not an attorney, so it may be that this injunction is only for the plaintiffs involved. However, my non-attorney view doesn’t see any limitations in the ruling. The attorney who posted this on Twitter/X stated, “Texas court enters nationwide injunction…,” so it likely is such a ruling. Of course, this ruling came out today; it’s probable that FinCEN may not have even read it yet! Additionally, it’s certain to be appealed. (The appeal in the 11th Circuit Court of Appeals, NSBU v Yellen, was heard in September; no decision has come out yet.) It’s a near certainty that this case (or NSBU v Yellen) will find its way to the Supreme Court in 2026.
I will update this post when FinCEN issues a statement on today’s ruling.
Tags: BOI