On March 1, 2024, a Federal District Court in Alabama ruled that the Corporate Transparency Act (CTA) violated the constitution. National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala., March 1, 2024). As part of the ruling, the court enjoined the Financial Crimes Enforcement Network (FinCEN) from enforcing the CTA against the plaintiffs, that is, the National Small Business Association. Further, FinCEN is not currently enforcing CTA against the members of the National Small Business Association only if they were members as of March 1, 2024. This case is being appealed to the 11th Circuit, and until the 11th Circuit of Appeals makes a ruling, FinCEN stated that it would not enforce the CTA against the plaintiff, but all other reporting companies must comply with the CTA’s reporting requirements. The news release by FinCEN can be found at https://fincen.gov/news/news-releases/updated-notice-regarding-national-small-business-united-v-yellen-no-522-cv-01448.
What does this mean for most companies? Most companies are still required to comply with the CTA’s beneficial ownership information reporting requirements. For entities formed prior to January 1, 2024, the reporting requirements must be met before January 1, 2025. For entities formed in 2024, beneficial ownership information reporting requirements are due within 90 days of formation.
If you have questions regarding the application of National Small Business United v. Yellen, including how the reporting requirements apply to you or your business, reach out to your attorney at Gunderson, Palmer, Nelson & Ashmore for guidance.
For more information on the CTA, please click here.
