On March 1, 2024, the federal district court in the Northern District of Alabama declared in the case of National Small Business United v. Yellen that the Corporate Transparency Act (“CTA”) exceeds the Constitution’s limits on Congress’s power. The court enjoined the Department of the Treasury and Financial Crimes Enforcement Network (“FinCEN”) – the agency responsible for implementing the CTA – from enforcing the CTA against the plaintiffs in this case. While the ruling enjoins enforcement only against the plaintiffs in the specific case, the rationale used by the court is a broad rejection of the constitutionality of the statute, rather than a more tailored “as applied” rationale. Following the ruling, FinCEN issued a statement clarifying it will only cease enforcement with respect to the specific plaintiffs in the case, rather than with respect to all reporting companies. Those plaintiffs include Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association (“NSBA”), and members of the NSBA as of March 1, 2024 (collectively, the “Plaintiffs”). As of now, the CTA and its beneficial ownership information (“BOI”) reporting requirements remain in effect for all other entities that are required to report BOI to FinCEN under the CTA.Continue Reading Federal Court Finds Corporate Transparency Act Unconstitutional: Navigating Implications for Reporting Companies