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Update on Corporate Transparency Act & FinCEN Reporting

Published March 12, 2024

Over the past few months, business owners have seen and received warnings about the Corporate Transparency Act (CTA) and the reporting obligations to FinCEN that went into effect on January 1, 2024.  In the past week, however, headlines broadcasted a different message: The CTA is Declared Unconstitutional.

As expected, there is more to the story.  In the National Small Business United v. Yellen case, the US District Court for the Northern District of Alabama declared the CTA unconstitutional by finding that the law “exceeds the Constitution’s limits on Congress’ power.”  The Court also enjoined the enforcement of the CTA against the plaintiffs in the case. There lies the nuance.  The decision only applies to the plaintiffs in the action: Isaac Winkles and reporting companies of which Isaac Winkles is a beneficial owner, and the National Small Business Association and its members as of March 1, 2024.

Shortly after the order issued, FinCEN issued a press release, stating that it would comply with the order and not require the plaintiffs in the case to report their beneficial owner information to FinCEN. Notably, the press release specified that the reporting obligation would only be suspended for the plaintiffs of the case. So other than the plaintiffs, for now, the CTA continues to apply to all other reporting companies and beneficial owners.

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Nothing in this blog is intended to constitute legal advice and your interactions with this blog do not result in the formation of an attorney-client relationship. All matters are different and, as such, nothing in this blog is intended to guarantee, warrant, or predict a specific outcome.