Federal District Court Finds Corporate Transparency Act Unconstitutional: Are Small Businesses Still Required to Comply?

On March 1, 2024, U.S. District Court Judge Liles C. Burke, of the Northern District of Alabama, declared the Corporate Transparency Act (CTA) unconstitutional and permanently enjoined the Department of Treasury from enforcing it against the National Small Business Association and its ~65,000 members ("NSBA"). At issue was the CTA's reporting requirement, wherein most entities incorporated under State laws are required to disclose beneficial ownership information (BOI) to the Financial Crimes Enforcement Network ("FinCEN"), the Treasury Department's criminal enforcement arm. Plaintiffs, an Alabama businessman and an association in which he is a member, the NSBA, sought a declaration that the CTA's mandatory reporting requirements exceeded Congress's Constitutional authority under Article I and violated the First, Fourth, Fifth, Ninth, and Tenth Amendments. Judge Burke ultimately held that Congress exceeded its Constitutional powers in enacting the CTA's mandatory reporting requirements without addressing whether the CTA violated any Constitutional Amendments.

Read the full article by Richard L. Hathaway here.

Corporate Transparency Act