Don’t File FinCEN

Yesterday, Judge Mazzant put the FinCEN registration of beneficial ownership for companies on hold nationwide. In the Texas Top Cop Shop v Garland et al. (case 4:24-cv-00478 December 3, 2024), the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction against the enforcement of the Corporate Transparency Act (CTA). He said the FinCEN registration requirement was unconstitutional and placed unreasonable burdens on small businesses.

I suggested that you wait to register until the bitter end of the December 31st deadline. For now, you don’t have to meet the December 31st deadline. I am sure that the Treasury Department under Janet Yellen will appeal the ruling, but it will give the Trump Administration time to cut the program.

Trump has already named a replacement for Yellen. I am sure Trump will do something about it, because it is estimated that businesses will spend over $22 billion just trying to comply with it in the first year.

Mazzant said that the government didn’t have safeguards in place to protect the private data they were collecting. FinCEN said they would share the data with all state and federal agencies, and even banks. They basically have all your data anyway, but this just would have tied it up in a nice little package.

The judge said it violated the First and Fourth Amendments to the Constitution. He concluded that a nationwide injunction was necessary to provide meaningful relief and address the extensive constitutional violations identified.

With Trump prioritizing deregulation, I believe he will act quickly, because this is a really bad federal government intrusion into small businesses, which are designated by the constitution to be overseen by the states.

FinCEN registration would be nearly impossible to comply with going forward and simply would give the federal government the ability to take out small businesses they didn’t like for some reason. It is just another example of the lawfare that the current administration is waging against anyone who stands in their way.

We will still have to watch the courts and possible appeals, but for now have a Merry Christmas and Happy New Year. I will keep you posted if I see anything coming up.

Lee Phillips, JD
United States Supreme Court Counselor