Last week, a Texas U.S. District Court Judge preliminarily blocked the Corporate Transparency Act (CTA) and its implementing regulations nationwide.

Calling the Act a “flaking, quasi-Orwellian statute,” Judge Amos L. Mazzant III issued the injunction at the request of business plaintiffs alleging that the CTA – which would have required that an estimated 32.6 million existing business entities disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network – falls outside of Congress’s powers to regulate interstate and foreign commerce, because it regulates incorporated entities regardless of whether they engage in commercial activity.

Prior to the ruling, small businesses that met certain criteria would have had to file reports with the Department of Treasury by January 1, 2025, or risk fines and criminal penalties. Thanks to this ruling, those requirements no longer apply – at least until the conclusion of legal proceedings, at which point the court may enter a permanent injunction. Until and unless an appellate court overrules or narrows the injunction, no businesses are obligated to comply with the former reporting requirements.

“The fact that a company is a company does not knight Congress with some supreme power to regulate them in all aspects—especially though the CTA, which does not facially regulate commerce,” Mazzant wrote in his opinion. Read more.