UPDATED 3/18/24
On March 1, 2024, a Federal District Court in Alabama declared that the Corporate Transparency Act (CTA) is unconstitutional (National Small Business United v. Yellen). The new BOI reporting requirements were mandated in an attempt to reduce money laundering, financial corruption, terrorism financing, and foreign espionage. (see related post )
However, this ruling determined that the CTA oversteps the bounds of authority granted by the Constitution. In addition to the challenge against the regulatory powers of Congress, Plaintiffs argued that the requirements create unfair and excessive financial and administrative burdens for small businesses. There were also privacy-related concerns due to the nature of the information required to be disclosed to FinCEN. (See this Journal of Accountancy article for additional details about the ruling)
Since the CTA took effect on January 1, 2024, there has been continued discourse over the value of the oversight provided versus the potential infringement on constitutional rights. This decision only rekindles the debate. The Justice Department, on behalf of the Treasury Department and FinCEN, filed a Notice of Appeal in the U.S. Court of Appeals for the Eleventh Circuit on March 11, 2024.
In conjunction with this filing, FinCEN issued a press release clarifying that the March 2 decision only applies to the plaintiff and it members, and advising all other organizations to continue to follow the BOI reporting requirements, “Other than the particular individuals and entities subject to the court’s injunction… reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations.”
GYF will continue to monitor changes related to the Federal CTA and BOI reporting requirements and will provide informational updates. If you need assistance, please contact your GYF Tax Executive at 412-338-9300.
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