Court Rules Corporate Transparency Act Unconstitutional for Specific Plaintiffs

Author: Tara M. Coffman

The Corporate Transparency Act (“CTA”), which became effective January 1, 2024, has been declared unconstitutional by the United States District Court for the Northern District of Alabama. The CTA requires certain businesses to report beneficial ownership information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”). A complete overview of the CTA can be found here .

While recent headlines have widely declared that the CTA has been found to be unconstitutional, the ruling in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) applies exclusively to the plaintiffs in this case (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)). Following the March 1, 2024 ruling, FinCEN has issued a brief statement indicating it will not enforce the CTA as to the plaintiffs of this case. The broader implications of this ruling on other entities subject to the CTA reporting requirements remain unclear. Therefore, it is prudent for companies and business owners to continue complying with the reporting requirements set forth under the CTA.

If you have any questions about this information, please do not hesitate to contact John W. Campbell, Jr., Esquire at jcampbell@satclaw.com or Tara M. Coffman, Esquire at tcoffman@satclaw.com.