Notice: Federal Court Rules Corporate Transparency Act Unconstitutional.
On Friday, March 1, a federal court ruled the Corporate Transparency Act (CTA) unconstitutional, and the federal government appealed the decision on Monday, March 11. Meanwhile, Financial Crimes Enforcement Network (FinCEN) has provided notice that as a result of this opinion, the government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time. CAI wanted to share this news with you immediately and we will provide additional details as they become available.
In a stunning decision late last week a federal court ruled the Corporate Transparency Act (CTA) unconstitutional.
On March 1, U.S. District Court Judge Liles C. Burke issued a 53-page opinion granting summary judgment in a lawsuit filed by the National Small Business Association. In his decision, Burke wrote the Corporate Transparency Act “exceeds the constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”
The court then permanently directed the government to stop enforcement of the CTA against the plaintiffs and ordered a hearing on awarding litigation costs.
While it is likely this litigation will continue in the federal court system, the initial decision is a victory for small businesses. More importantly, the decision means compliance with the CTA is in question.
Attorneys will interpret how this impacts community associations. Stay tuned to the CAI Advocacy blog for more information.
This lawsuit provides additional uncertainty and lack of clarity regarding CTA. Now is a great time to contact your Senator and urge them to delay implementation of the Corporate Transparency Act and clarify whether community associations are exempt from CTA reporting requirements.
Resources:
CAI Corporate Transparency Act Resources
Call to Action = Contact your Senator Today
Federal Court Ruling
National Small Business Association Announcement
Forbes Article
