Mark L. Brasee
402.978.5306mbrasee@fraserstryker.com email Mark
On March 1, 2024, in the case of National Small Business United v. Yellen, the U.S. District Court for the Northern District of Alabama entered a final declaratory judgment ruling that the Corporate Transparency Act (“CTA”) is unconstitutional, concluding the CTA exceeds the Constitution’s limits on congressional authority.
The final judgment is narrow in scope and only permanently enjoins the federal government from enforcing the CTA against the plaintiffs. The CTA remains law and the final judgment does not prevent the federal government from enforcing the CTA against others not party to this case, nor from maintaining its Beneficial Ownership Information (“BOI”) database.
The federal government filed a Notice of Appeal on March 11, 2024. Therefore, final resolution of this case will take many months. In the meantime, the Financial Crimes Enforcement Network continues to assert the CTA’s general applicability to those not covered by this ruling. Presuming the federal government’s requested stay is granted, the CTA will continue to be in effect, along with all of its various reporting obligations and associated reporting timelines.
Given the limited effect of this judgment, compliance with the CTA remains best practice until further notice. Entities formed on or after January 1, 2024, that do not qualify for an exemption, must submit their initial BOI reports within 90 days of formation. Entities formed prior to January 1, 2024, that do not qualify for an exemption, have until January 1, 2025, to submit their initial BOI reports. Reporting companies which have already filed an initial report continue to have a duty to file updated reports within 30 days of any change to their beneficial ownership.
Fraser Stryker continues to monitor this case and other cases regarding the CTA. We are available to assist businesses and their owners navigate the changing landscape of this new federal law. For more information on the Corporate Transparency Act, please contact attorneys Mark L. Brasee, Paul J. Halbur, or Karsen E. Sims for assistance.