Mar 07 Corporate Transparency Act Challenged in Alabama

By Senior Tax Manager, Samantha Guis

The chatter and discussion around the Corporate Transparency Act has dominated several sectors since it became effective on January 1, 2024.  Alerts, articles, and seminars have been widespread to make sure all are aware of any responsibilities.

On March 1, 2024, Judge Liles Burke of the United States District Court for the Northern District of Alabama ruled for plaintiffs in National Small Business Association et al. v. Janet Yellen et al., declaring the law to be “unconstitutional because it exceeds the Constitution’s limits on Congress’ power.”  This is one of the first cases to challenge and side with the plaintiffs on the permissibility of collecting this data.

On March 4, 2024, Financial Crimes Enforcement Network (FinCEN) responded to the ruling and released the following:

FinCEN will comply with the court’s order 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 Isacc Wrinkles 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.

While the above have a current respite against filings, FinCEN’s stance is that all others must still comply with the filings required. Filers who were in existence prior to January 1, 2024, continue to have until the end of the year for their initial filings. Filers coming into existence on or after January 1, 2024, have 90 days from inception to file their report.

For questions, feel free to contact Samantha Guis at [email protected].