Corporate Transparency Act Ruled Unconstitutional, But Reporting Continues

On March 1, 2024, a U.S. District Court in Alabama held[1] that the Corporate Transparency Act (CTA) is unconstitutional as a matter of law. In its ruling, the District Court explained that the CTA and its requirements exceed any authority granted to Congress.

What does this mean going forward?

As of right now, nothing has changed. Companies should continue to comply with the CTA’s reporting requirements until directed otherwise.

On March 4, 2024, the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury, released a statement confirming that the federal government is not currently enforcing the CTA against the plaintiffs in the Alabama District Court case, implying that other reporting companies should continue to comply.[2] Therefore, other reporting companies should continue to comply with the CTA’s requirements until further notice. You can read more about the CTA’s reporting requirements here and here.

McCarty Law LLP will continue to monitor subsequent developments regarding the future of the CTA. If you have any questions, please don’t hesitate to reach out to your primary McCarty attorney or Attorney Sadie Dupont at [email protected], or (920) 257-2238.

[1] National Small Business United v. Yellen, No. 5:22-cv-1448-LCB (N.D. Ala. 3/1/24).
[2] Included as a plaintiff was the National Small Business Association – if your business is a member of the NSBA, you are excused from complying with the CTA for the time being (must have been a member as of March 1, 2024).
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Sadie E. Dupont

Business & Corporate Law Attorney at McCarty Law LLP
Sadie’s practice is focused primarily on business law matters, such as business formations, contract drafting, and mergers and acquisitions. She has an interest in observing and understanding the interconnectedness of the law with other business elements such as finance, marketing, management, sales, and operations.