Corporate Transparency Act and BOI Ruled Unconstitutional by Alabama Federal District Court
A federal district court in Alabama has found the Corporate Transparency Act (CTA), which includes the controversial Beneficial Ownership Information (BOI) reporting requirements, to be unconstitutional. The court document includes the statement that the CTA, “exceeds the Constitution’s limits on the executive branch.” The National Small Business Association (NSBA), a trade group, initiated the lawsuit.
Furthermore, the court issued an injunction preventing federal government entities from enforcing the act on the parties involved in the case, meaning the approximately 65,000 members of the NSBA across the United States.
The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) is suggesting that businesses affected by the act seek competent legal advice before choosing to ignore the original regulations. Furthermore it is expected that the government will appeal this decision.
The NSBA issued a statement on Tuesday, March 5, 2024, stating: “The ruling by Judge Liles Burke to strike down the CTA is a victory for law-abiding small-business owners everywhere who would have been forced to disclose their sensitive personal information to a government database.”
According to a March 1, 2024 FinCEN press release:
“FinCEN is complying with the court’s order and will continue to comply with the court’s order for as long as it remains in effect. As a result, the government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time.”
Note that, as of this writing, the CTA and BOI reporting remains in effect for all other reporting companies.
Visit the KRS BOI Updates page to stay on top of the latest developments.
Related articles
Corporate Transparency Act — Beneficial Ownership Information Reporting Requirement
The Who, What, When of BOI Reporting Requirements
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