Key Takeaways
On March 1, 2024, a U.S. District Court for the Northern District of Alabama ruled that the Corporate Transparency Act (“CTA”), which requires most reporting companies to file a beneficial ownership information report (“BOI Report”) with FinCEN, is unconstitutional. The ruling asserts that Congress exceeded its powers by mandating companies to disclose personal stakeholder information to FinCEN. Please note that the ruling only applies to the enforcement of the CTA against the plaintiff, the National Small Business Association.
What Should You Do
Currently, no nationwide injunction prevents the law from being enforced against other entities. Thus, reporting companies that are not exempt under the CTA should be prepared to meet the timelines for filings required by the CTA. Any reporting company formed in 2024 has only 90 days to file the BOI Report unless an exemption applies. Reporting companies formed or created before January 1, 2024, must file the BOI Report by January 1, 2025. If your company is holding off on filing until January 1, 2025, you should gather beneficial ownership details from the members or shareholders now to avoid missing the deadline.
For overview of the CTA, please see here.
