News
06
www.asianhospitality.com
December/January 2025 | Issue 232
A
nationwide preliminary
injunction issued by the U.S.
District Court for the Eastern
District of Texas on Dec. 3, halting
enforcement of the Corporate
Transparency Act and its regulations,
has been reinforced. AAHOA called the
original decision a significant victory
for small business owners, including its
members.
The CTA, aimed at enhancing
corporate ownership transparency,
faced criticism for imposing heavy
compliance burdens on small
businesses. The act, which became
effective Jan. 1, required nearly 33
million U.S. businesses classified as
"reporting companies" to disclose
their beneficial owners to the
Treasury Department’s Financial
Crimes Enforcement Network by Jan.
1, 2025.
"This decision is a monumental win
for small business owners, including
AAHOA members, who were facing
unnecessary regulatory burdens under
the CTA," said Miraj Patel, AAHOA
chairman. "AAHOA stands firmly with
its members in advocating for fair
regulations that promote business
growth. We commend the court's
ruling and will continue to monitor
developments to ensure our members'
voices are heard."
Judge Amos Mazzant III ruled the
CTA exceeded Congress's authority
to regulate interstate and foreign
commerce, describing the legislation
as "quasi-Orwellian" and raising
concerns about government overreach.
On Dec. 23 a motions panel of the 5th
Circuit overturned the injunction, then
the day after Christmas another 5th
Circuit panel reinstated it, according
to JDSupra.com. The court will hear
arguments on March 25 with briefings
set for February.
“The CTA has faced significant
constitutional challenges, leaving
Reporting Companies in a state of
uncertainty,” JDSupra said. “While
compliance obligations are currently
on hold, the CTA’s requirements could
once again be reinstated by future court
rulings.”
Law firm Foley & Lardner LLP also
pointed out that the injunction is not a
final decision.
“The order temporarily halts
enforcement of the CTA but could
be overturned on appeal or if the
government ultimately prevails on the
merits,” Foley & Lardner said.
Laura Lee Blake, AAHOA president
and CEO, also supported the injunction.
"The CTA's reporting requirements
were set to impose an overwhelming
administrative and financial burden on
small businesses, potentially affecting
millions," Blake said. "This injunction
provides relief to our members, who
already face complex operational and
regulatory challenges. We remain
committed to supporting their success
and will continue advocating for fair
policies."
AAHOA emphasized that the
injunction is preliminary and could be
reconsidered or overturned on appeal.
"Companies are not required
to comply with the CTA's filing
requirements at this time," the
association said. "AAHOA will continue
to monitor developments and
encourage members to reach out with
questions or for additional resources."
Federal Court halts Corporate
Transparency Act
Opponents of the act say the government is likely to seek a stay of the injunction
The U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction
halting enforcement of the Corporate Transparency Act, aimed at enhancing corporate ownership
transparency. AAHOA called the injunction a major victory for small business owners.