On Dec. 3, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction blocking the enforcement of the Corporate Transparency Act’s beneficial ownership information reporting requirements, which most NRCA members were scheduled to be subject to starting Jan. 1, 2025.
The Corporate Transparency Act would require companies disclose and regularly update detailed beneficial ownership information to the Financial Crimes Enforcement Network. It subjects covered entities and their “beneficial owners” to vague and complex reporting requirements while putting their sensitive personal information at risk. Failure to comply would result in fines exceeding $590 per day, as well as felony charges and up to two years of imprisonment.
This is a huge victory for NRCA’s tireless advocacy opposing the Corporate Transparency Act on behalf of its members and working with coalition member National Federation of Independent Business to raise awareness regarding the unintended consequences that may occur through this unconstitutional law.
NFIB argued in the lawsuit that the Corporate Transparency Act is unconstitutional because it exceeds Congress’s 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.
NRCA agrees with the court and is thankful for everyone’s efforts ensuring this requirement is paused before the new year. NRCA looks forward to making this preliminary injunction permanent.
