A federal district court in Alabama recently ruled that requiring certain businesses to report beneficial ownership, as enacted under the Corporate Transparency Act (CTA), is unconstitutional. The judge granted summary judgment to the plaintiffs in the case of National Small Business United d/b/a the National Small Business Association, et al v. Janet Yellen, Case No. 5:22-cv-1448-LCB.
Essentially, the court ruled that Congress exceeded its authority when it mandated that certain businesses reveal who their owners are. But that doesn’t mean all businesses are off the hook. On March 4, 2024, FinCEN issued a notice announcing that it will not enforce the BOI reporting requirements against the plaintiffs – the National Small Business Association (NSBA) and its 65,000 members and an Alabama businessman. This means that if your business is not a member of the NSBA, you are still required to file a report with FinCEN.
As a reminder, entities established before January 1, 2024, are not required to file a report until January 1, 2025. For entities established on or after January 1, 2024, they only have 90 days from creation under state law to file an initial BOI report.