December 9, 2024 
 
You may have seen one of the gazillion promotional emails for you to sign up for a service to help you file under the corporate transparency act, for beneficial ownership disclosure, with the federal government.  Not surprisingly, the CTA filing requirement has been paused, thanks to 6 plaintiffs in Texas - one individual and 5 companies composed of a family run business that sells materials to first responders, a company that sells licensed firearms, a Delaware Corporation that provides small businesses with IT Support, a Wyoming small dairy farm, and the libertarian party of Mississippi listed as a political organization.   See Opinion. 

This group of plaintiffs sought a preliminary injunction enjoining the government from enforcing requirements that corporate entities must disclose ownership.   Now, you may be wondering why this is such a big deal since the IRS has composition of ownership through the taxation process.  Well, sort of.   

Now, the idea behind the CTA was that a company may be used to veil illicit financial crimes, but the court determined the commerce clause does not justify regulating all companies based on nothing more than the fear that a reporting company might shelter a financial criminal.   Under the CTA, the intention was for all qualifying businesses to have to register the owners or beneficial owners as they were defined and provide a residential or business address, an official document, including a passport or a drivers license name and photo ID and that that such information would be readily accessible by any state local or federal government agency, looking into the corporation or company    

The premise of the opinion rendered by the Texas court is that the CTA will eventually be found unconstitutional, since the commerce clause does not authorize Congress a general police power or a general license to regulate an individual from cradle to grave, simply "because".  The court also discusses that entity creation and management is a state process - which it is - and therefore it is inappropriate for the federal government to require a registry. 

Now, this opinion does not strike down the CTA - Beneficial Ownership filing requirement - it merely pauses it, with an inference that the filing requirement will, in fact, be struck down for good, soon.   I've walked through some assessment hear because I know I have some LSAT takers and would be attorneys in the crowd.   For those who wish to try their hand at opinion interpretation, you can find the full body here -  https://polsinelli.gjassets.com/content/uploads/2024/12/cta-v-garland-district-court-opinion-preliminary-injunction.pdf.   

This federal decision does NOT pause state filing requirements.   New York has passed its own registration requirement, commencing January 1, 2026 - so plenty of time to be struck down as well - Senate Bill here - https://legislation.nysenate.gov/pdf/bills/2023/S995.