Tax Lawyer Explains: TEXAS Rule New Tax Law As Unconstitutional

Breaking news, everybody. A federal judge in East Texas today has ruled that the cta, or the Corporate Transparency act and the accompanying boi, or Business Owner Information Report is unconstitutional. My name is Mark Kohler. I'm an actual CPA and lawyer. I'm going to break this down with you. We've been talking about it all year long and you've got to get past the headlines. There's a lot of influencer out there that are just like, blah, blah. They're talking about this report like they know it. I've actually read the ruling, 79 pages by the judge in federal court. And I want you to know what the ruling is about, what politics to expect after this ruling and what you need to do now. Now, we've set up tens of thousands of entities over the last five to 10 years, last 20 years, frankly, in our law firm. We've been helping small business owners around the country. We know this law. We know LLCs and corporations, and we've been filing thousands of BOI reports this year. Well, now it's changed. So here's what this ruling is about. The plaintiff. There's six plaintiffs in this case, but they knew what they were doing. The first plaintiff is the top cop Shop Inc. In Texas. And then five additional plaintiffs that, that help take this nationwide. Now, there was a prior case in Arkansas where the judge ruled that this Corporate Transparency act was unconstitutional, but it was only specific to those plaintiffs. Now it affects all of us. Now, what was this law to begin with? Some of you are like, what the hell are you talking about, Mark? Well, this law was passed three years ago requiring us as business owners, an LLC or corporation. There was a few exemptions, but not for the Main street business owner where you needed to disclose your home address, who you are, who the owners and the managers are of your company by December 31st to the federal government fincen or face stiff penalties and even possible jail time if you did not report this. This is just four weeks away. Well, many, many people believe that this was burdensome. It violated our privacy. And even if it was out there to help stop drug traffickers, money launderers and human traffickers, very admirable goals here. It wasn't going to hit the mark anyway and it was too much work again, putting burdens and costs on small business owners. So this law was actually passed back in 2020, right before President Trump left office. And I'll come back to that because there's a lot of politics yet to come on this law. So this burdensome law on small business Owners that was affecting you and me, all of us to file this report by the end of the month is now on hold. This was a preliminary injunction. So what the judge did in this ruling, hearing from these six plaintiffs said, yep, this is too much for small business owners. I'm going to rule that it's unconstitutional and no one in the country has to comply with this. Now, this will undoubtedly be appealed by the Attorney General and it will go through the Fifth Circuit District Court and then up to the Supreme Court. Or will it? We'll come back to that. So this case says you don't need to file. So if you've already filed. Okay, done. If you were thinking about filing, you can now stop. If it gets reinstituted as law next year, let's say the Supreme Court says, nope, federal judge, you were wrong. We need this law and we're going to maintain it and enforce it. If that were to happen, then there will be an effective date where everybody will then be able to comply if they didn't. Because now it's on hold. So don't stress, don't feel like you have to report. We're going to come to more to do there. But this currently puts a stay on anybody that needs to file or was going to file until the Supreme Court hears it. And this ruling was out of Texas just last night, official today. So we've been filing thousands of these and now we're stopping. So we set up entities every day for clients with these. Now, we've said, let's not do that. Now let's go to the politics for a moment. This was actually passed back in December of 2020 under a larger act, a National Defense act, that was just this huge bill. And President Trump vetoed that bill, but did it for other reasons. He did not comment on this particular provision, the cta, or Corporate Transparency Act. And when Joe Biden got into office, he said, nope, I'll sign it. It got vetoed, and then Joe Biden signed it. So big deal. So this, this deal is. So let me repeat that. I want to make sure I said that properly. President Trump said, I will not sign it and I'm going to veto it. And then they overrode his veto and passed it, and Joe Biden enforced the law. So that's where we're at on this. Now. We don't know if President Trump is going to enforce this. He may come in and say, you know what, being the new attorney general, we feel like this law does help stop bad actors in America, people doing bad things, trying to hide behind LLCs. And we need you, the business owners to self report so that we can help find out who those bad people are. That was the goal. So our general opinion is here and this is just speculation. We're not sure where this is going to land. But the Republicans, the Congress and Donald Trump have typically tried to create less burdens on business owners. Let's just enforce the laws we have now with better enforcement. Why bring business owners into the mix and create more work for them? That's typically been President Trump's M.O. so he may say, okay, the Attorney general under Joe Biden filed an appeal. We're just going to pull it, we're going to put it in the drawer. We're not going to enforce it. We don't want to pursue this appeal and we're going to let business owners get back to business. So we'll see what happens in the politics. Now, if any of you have a question, please put it down below. I'll do my best to answer it here. There's a moving law right now right in America. It's exciting. But I'm also going to be going live here shortly. What I was planning on doing today before this law came out, we were going to talk about crypto taxation. Right now, what's going on in the crypto market, lots of people with some gains and worried about year end tax planning. So I'm going to go live here. Soon as this is over, I'm going to hit reset and we're going to go live again on crypto taxation if you want to stick around for that. Also, it's in the playlist right after this video. So what do you do when now moving forward. And I alluded to this earlier, nothing. You do not need to file. You don't need to worry. If you already did file and if the law is reinstituted, you can go back and file at that time and you will be grandfathered in because there's been a stay on the enforcement of this law. But there's another important thing I want you to do. And this is what the other influencers that maybe aren't in the tax and legal industry like me every day. This was a wake up call, people. This was a shot across the bow that said you better have your entity organized. Who is the freaking owner? Do you have a corporate book? Is it in good standing with the state? Oh, I've got an entity I set up three years ago. It's just sitting there doing nothing. Well, get rid of it because if you didn't you had to report under the boi. So we were helping thousands of clients this year clean house. That was a good thing. Many people that had LLCs and corporations that were sitting around that did not have good asset protection, didn't have a corporate book or minutes and they weren't even in good standing with the state or they needed to be dissolved. Some states like Arizona, if you don't actively dissolve it, it stays there. Other states like Washington state, if you don't pay, they kill it. And so other people were all over the board on this. So I wanted to say what to do. Don't worry about this law, but take it as a reminder. Between now and January, get with a good business attorney, someone that's affordable, that can understand what the small business owner is facing. We help clients every day at kqs, lawyers and Main street business and we're getting the reports filed that need to be filed, getting their books cleaned up, doing their annual minutes. And all of you should be having a board meeting, your only family, your own family board meeting during the holidays and taking a tax write off to get your corporate book put together. That's going to save you taxes. I'd love, every time I get on camera, I want to freaking save you taxes. And if you're having a get together around the holidays, hold a board meeting. Every small business owner is a family office. When you have an llc, you've got a family office. You do not need to be a billionaire to have a freaking family office. Have a meeting, get your books put together, have a good legal corporate book for your LLC or corporation. And oh, thank you, FinCEN. Bye bye. But thanks for reminding me. I got to keep my craft together. And then you take a tax write off for the travel, for yourself, for whoever you paid for to be at that meeting, the dining, oh, I love it. I paid for my Thanksgiving dinner on a corporate card because we had a board meeting after. That's how it works, people. So big news. A lot of opportunity for us as business owners to stay organized, get our crap together, have an awesome 2025. The energy is just so exciting right now. Interest rates are going down, stock prices, crypto prices are going up. The consumer price index is already going down, inflation rates are already down. In just one month, people. We're getting back to it and this is going to feed on itself. We're going to save taxes, we're going to see tax legislation extended that Donald Trump started back in his first term of office. We're going to see those depreciation expenses Come back. Rates stayed low. It's going to be good. So get to work. And you business owners, keep living your American dream. Don't give up on it. I know it can be hard. It can be lonely. It can be a grind. I'm in there grinding every day. I was up late working last night. That's okay. Because we control our own destiny. So keep living the dream and don't give up. Now, any questions here that came out that you think would be a good question here?

So we have a question here says, where can I read more about this?

Well, we have not. I've done some tweets on this on X. I have not written a full article explaining this yet. The law just came out 12 hours ago or less. It's a 79 page ruling. You can certainly read about the requirements to do this. There's lots of articles out there by me and my partner, Matt Sorenson. But the law's changed now because it was deemed unconstitutional. So just get on Google, read up on the BOI if you want. I'm going to have an article come out real soon summarizing where this all stands. Next question, Next question.

I just paid my CPA to do this for me. Did I waste my money?

Well, for some of you that paid to get this done, we were charging 150 bucks. It was included for free with any entity we set up for our clients or we're doing their annual maintenance. We charge 200 bucks to do your minutes and your annual maintenance. We included the BOI so our prices did not go up. But if you paid someone to do this, you paid to get it done when you were supposed to. You were a good citizen. You tried to comply with the law and not wait till the last minute. Some of those people that wait till the last minute, I guess got a little bone thrown to them and they got out of paying a little extra earlier this year to get it done. Sorry about that. Your CPA did work. They did it for the right reason and it's water under the bridge. Sorry about that.

We have a lot of people in chat right now that have been saying, I'm so happy I procrastinated this for once.

Yeah, for you procrastinators. Damn it. This totally reaffirms your procrastination lifestyle. We got to work on that. But this is again not the time to procrastinate your board meeting minutes during the holidays. It's a great tax write off. Get your crap together, get over to mainstreetbusiness.com and for a couple hundred bucks. We'll make sure you're in good standing. All your minutes are done. You'll freaking love it. All right, everybody. Thank you for being here today. Keep living the dream. Don't give up. And I'm going to go live here in less than 10 minutes and give you some freaking awesome tax strategies for those of you where your wallet is going through the roof and and your crypto investments are better than expected. So I'll see you in just a few minutes.