NEW ORLEANS — The court case seeking to block enforcement of certain reporting requirements of small businesses has observers feverishly swiveling their necks like they’re watching tennis players slug it out across a net.
A Dec. 3 court ruling that blocked the U.S. Department of Treasury from enforcing the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements was overturned by a motions panel judge of the U.S. Court of Appeals for the Fifth Circuit on Monday, Dec. 23, and a new mid-January deadline for small businesses to report was set.
But on Thursday, Dec. 26, the nationwide injunction blocking enforcement related to BOI reporting was reinstated under the order of a separate Fifth Circuit merits panel.
“The Government appealed, and on December 23, 2024, a motions panel of this court granted the government’s emergency motion for a stay pending appeal. … The order also expedited the appeal to the next available oral argument panel,” the order reads.
“The merits panel now has the appeal, which remains expedited, and a briefing schedule will issue forthwith. However, in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.”
“The court’s reinstatement of the nationwide injunction is a welcome sigh of relief for small businesses,” says Rob Smith, senior attorney of the Small Business Legal Center for the National Federation of Independent Business (NFIB). “Since being told earlier this week that they must urgently submit their BOI reports, our nation’s small businesses have experienced enormous chaos and confusion. Thankfully, the court’s latest decision recognizes that the CTA and BOI reporting requirements pose serious constitutional questions. It also provides Main Streets across the country with a reprieve from this harmful mandate while our lawsuit proceeds.”
The CTA, a bipartisan law enacted this year to curb illicit finance by supporting law enforcement efforts, was written to require many small businesses—including laundromats and laundry services—to report basic information to the federal government about the real people who ultimately own or control them.
Companies were directed to file the required information by a deadline or possibly face severe civil and/or criminal penalties.
The legal challenge began when NFIB partnered with The Center for Individual Rights (CIR) and filed a lawsuit with the Texas Top Cop Shop, Data Comm for Business, Mustardseed Livestock, Russell Straayer, and the Libertarian Party of Mississippi.
In “Texas Top Cop Shop Inc. et al v. Garland et al,” the NFIB argues that the CTA is unconstitutional in that it exceeds Congress’ authority over the states, improperly compels speech and contradicts the right of anonymous association guaranteed by the First Amendment, and violates the Fourth Amendment by forcing the disclosure of private information.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].
