What It Means: A federal court issued a preliminary injunction that blocks the U.S. Department of Treasury from enforcing a law that requires more than 32 million small businesses to submit the personally identifiable information of each beneficial owner to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) by the end of December. The court’s issuance of a preliminary injunction blocks the U.S. Department of Treasury from enforcing the beneficial ownership information (BOI) reporting requirements.

Our Take: “The BOI reporting requirements are a harmful invasion of small business owners’ privacy and a misuse of their valuable time. Thankfully, the Court agreed and granted a preliminary injunction, giving small business owners a reprieve from this burdensome rule,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center.

A preliminary injunction is now in effect stopping the enforcement of the beneficial ownership reporting requirement. The Corporate Transparency Act (CTA) mandated small businesses hand over the private information of each beneficial owner and noncompliance would have resulted in steep fines and even jail time.

A lawsuit filed by NFIB called the CTA unconstitutional and an act of Congressional overreach extending beyond their power. The lawsuit also asserted the BOI reporting requirements violated both the First and Fourth Amendments, as it violated freedom of speech by mandated reporting and forced small businesses to share private information.

In this small business victory, the U.S. District Court for the Eastern District of Texas ruled in agreement with NFIB’s lawsuit.

“This ruling is a huge victory for small businesses nationwide, and just in time,” said Beth Milito, Executive Director of NFIB’s Small Business Legal Center. “For many Main Street small businesses, they were a mere four weeks away from the deadline to file their information in accordance with the CTA. The BOI reporting requirements are a harmful invasion of small business owners’ privacy and a misuse of their valuable time. Thankfully, the Court agreed and granted a preliminary injunction, giving small business owners a reprieve from this burdensome rule.”

Click here to learn more about this win for small businesses. For additional resources, visit the NFIB Small Business Legal Center. For information specific to your business, consult your tax, legal, and accounting advisor(s).