The Corporate Transparency Act has once again been thrusted into the national spotlight. On March 1st, a U.S. District Court judge in Alabama ruled the Corporate Transparency Act (“Act”) is unconstitutional, however, the ultimate direction of the Act is still undetermined. This ruling stemmed from a lawsuit that claimed the new Act violates five constitutional amendments.
The Court concluded that the Act “cannot be justified as an exercise of Congress’ enumerated power” and that it was “congressional overreach”. One Plaintiff, the National Small Business Association (“NSBA”) represents over 65,000 different member companies with the goal of providing small-business advocacy expertise. Many speculate the Justice Department to appeal this ruling.
As previously mentioned in a prior post, the newest version of the Corporate Transparency Act went into effect January 1st, 2024. It required certain businesses to report information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Unit. This reporting of ownership information is meant to decrease tax evasion and money laundering operations.
