A Texas federal district court has ruled against the enforcement of beneficial ownership information (BOI) reporting requirements, a component of the Corporate Transparency Act (CTA), marking a significant win for small businesses. The decision comes as part of a lawsuit filed by the National Federation of Independent Business (NFIB) in May, which challenged the legality of these mandates.
The NFIB argued that the CTA exceeds congressional authority and infringes upon First and Fourth Amendment rights by imposing undue burdens on small enterprises and mandating disclosure of private information. The court concurred with this perspective, referencing Article I, Section 8 of the U.S. Constitution, commonly known as the Commerce Clause. It rejected the government's claim that BOI requirements were justified under Congress's power to regulate commerce among states. "The fact that a company is a company does not knight Congress with some supreme power to regulate them in all aspects—especially through the CTA, which does not facially regulate commerce," stated the court.
This ruling contrasts with a previous case from Alabama where a judge declared the CTA unconstitutional but limited its application to specific parties involved in that case. In contrast, due to NFIB's extensive membership base, this recent decision extends relief from BOI requirements to all small businesses nationwide.
