THE U.S. DISTRICT Court for the Eastern District of Texas issued a nationwide preliminary injunction on Dec. 3, halting enforcement of the Corporate Transparency Act and its regulations. AAHOA called the 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.
However, the government is expected to seek an expedited appeal and request a stay of the injunction.
“The court’s order is a preliminary injunction only and not a final decision,” noted law firm Foley & Lardner LLP. “The order temporarily halts enforcement of the CTA but could be overturned on appeal or if the government ultimately prevails on the merits.”
"The CTA's reporting requirements were set to impose an overwhelming administrative and financial burden on small businesses, potentially affecting millions," said Laura Lee Blake, AAHOA president and CEO. "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."
New York City Mayor Eric Adams signed the Safe Hotels Act on Nov. 4, mandating operating licenses for all hotels. The act, sponsored by City Council Member Julie Menin, faced opposition from AAHOA and the American Hotel and Lodging Association and was revised twice before approval.
