CLIENT ALERT: Future of Corporate Transparency Act Unclear: Navigating Uncertain Requirements

Overview

As of January 1, 2024, the Corporate Transparency Act (CTA) requires all entities formed or registered to do business in the United States, absent qualifying for an exemption, to furnish a beneficial ownership information (BOI) report containing information about the entity’s “beneficial owners” to the U.S. Treasury’s Financial Crimes and Enforcement Network (FinCEN). For more information on the requirements of the CTA, click here. However, on March 1, 2024, Judge Burke for the U.S. District Court for the Northern District of Alabama ruled in National Small Business United, d/b/a the National Small Business Association, et al. v Janet Yellen that the CTA is unconstitutional because it exceeds the Constitution’s limits on Congress’ power.

What Does This Mean For You?

This ruling likely has no impact for you at this time but may impact you in the future. For now, this ruling only prevents enforcement of the CTA against the named plaintiffs in the case. On March 4, 2024, FinCEN released a notice regarding the ruling stating its intent to comply with the ruling for now and not enforce the CTA against the named plaintiffs. FinCEN has not extended this position to other reporting entities and is expected to challenge the ruling. If your entity is not one of the named plaintiffs, your filing requirement remains for the time being. However, this ruling opens the door for a higher court to strike down the CTA in the future.

As a reminder, for entities formed or registered in 2024, the initial filing due date under the CTA is 90 days from the date of formation/registration. For entities formed or registered on January 1, 2024, the initial due date of March 31, 2024, is fast approaching. For entities formed or registered before 2024, the initial filing deadline under the CTA is December 31, 2024. For these entities formed or registered before 2024 it may make sense to wait and see if further interim guidance is issued prior to the December 31, 2024 deadline. We will continue to provide updates as further developments occur.

As always, should you have any further questions, please feel free to contact the attorneys at Tripp Scott, P.A. or email corporatefilings@trippscott.com.