Recent CTA Development to Watch
March 5, 2024 | Sherrard Roe Blog I Will D. Pugh and Lindsay B. Dial
On March 1, 2024, a U.S. District Judge in Alabama issued a judgment holding that the Corporate Transparency Act (the “Act”) is unconstitutional and enjoined FINCEN from enforcing the Act’s reporting requirements against the plaintiffs in that case. The Honorable Liles C. Burke of the United States District Court for the Northern District of Alabama held that the Act exceeded Congress’ authority to regulate interstate commerce, and that the Act lacked a sufficient nexus to Congress’ taxing power or its power to regulate foreign affairs to be a necessary or proper means of achieving Congress’ policy goals.
At this time, it is currently unclear as to the implications of this ruling regarding the continued compliance with the Act’s mandatory reporting obligations for those persons not party to that case. It is anticipated that the Treasury Department will file an immediate appeal to the Eleventh Circuit Court of Appeals given the grant of an injunction and the decision’s far-reaching consequences. For now, the FinCEN BOI portal is still up and operational. Accordingly, while we await guidance from the Treasury and a final decision from the Court of Appeals, it is prudent and advisable to continue to have our clients gather the required information and properly file pursuant to the Act’s requirements, especially for those entities formed during the 2024 calendar year. We will continue to monitor all developments closely and will update you as we learn more.
Should you want our assistance considering the applicability of the CTA to your organization or complying with its filing requirements, please reach out to your primary Sherrard Roe attorney or one of the leaders of our CTA compliance team – Will D. Pugh or Lindsay B. Dial.
