Corporate Transparency Act stopped – for now
A Federal District Court in Texas has issued a nationwide preliminary injunction against the Corporate Transparency Act, finding that the plaintiffs have met the burden of showing the law is a likely violation of both the 1st and 4th amendments of the U.S. Constitution. This action comes just weeks ahead of a looming deadline of 12/31/2024 when millions of small businesses would have had to make their first filing.
Cutting to the chase, this means that small business owners do not have to comply with this law at this time as the court’s injunction applies to the law and the enforcement of the law. This decision from a District Court in Texas falls within the 5th Circuit Court of Appeals. It is a near certainty that the Government will file a motion to stay the District Court’s order in the Court of Appeals. It is also highly likely that the Government will ask for that appeal to be expedited. So, this decision is not the final say.
The situation is subject to change which complicates the issue since we are so close to the deadline for most small businesses. As always, SBAM will be watching this closely and will keep you up to date.
It is important to understand that this decision is not a final finding on the law, but rather, it is a District Judge’s decision to prevent the enforcement of the law while the case is being litigated. It is important to understand that this decision is not a final finding on the law, but rather, it is a District Judge’s decision to prevent the enforcement of the law while the case is being litigated. Nationwide injunctions like this one by a District Court are rare, and the chance that the Court of Appeals will reverse the preliminary injunction is not small. If that happens, compliance will be required again. I would not be surprised if the preliminary injunction is appealed all the way to the Supreme Court. So that means it might be a few more weeks before we know for sure if the pending filing deadline stands.
I will also take this opportunity to note that SBAM’s lawsuit against the Corporate Transparency Act is still active and we could receive a decision before year end. It is not clear if the Federal District Judge in Michigan will want to weigh in before the end of the year given the parallel case out of Texas.
####
The Small Business Association of Michigan focuses solely on serving the needs of Michigan’s small business community through advocacy, collaboration and buying power. Today they serve over 32,000 members in all 83 counties of Michigan. SBAM is located in Lansing, just one block from the Capitol.
Images courtesy of SBAM
