The Corporate Transparency Act (CTA), enacted in 2021, mandates that certain U.S. entities, including limited liability companies (LLCs), report their beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). This requirement aims to enhance transparency and combat financial crimes such as money laundering and tax evasion.
However, the CTA has faced legal challenges concerning its constitutionality. In March 2024, the U.S. District Court for the Northern District of Alabama ruled in National Small Business United v. Yellen that the CTA exceeded Congress's constitutional authority, thereby enjoining its enforcement against the plaintiffs in that case.
Subsequently, on December 3, 2024, U.S. District Judge Amos Mazzant of the Eastern District of Texas issued a nationwide injunction against the enforcement of the CTA. Judge Mazzant determined that the law overstepped federal authority and infringed upon states' rights under the Tenth Amendment. This decision effectively halted the implementation of the BOI reporting requirements across the country.
These judicial rulings have significant implications for businesses subject to the CTA's reporting mandates. The nationwide injunction provides temporary relief from compliance obligations, but the future of the CTA remains uncertain as appeals and further legal proceedings are anticipated.
Entities previously required to report under the CTA should stay informed about ongoing legal developments and consult with us to understand their current and future compliance responsibilities. It's crucial to monitor updates from FinCEN and other regulatory bodies, as the situation continues to evolve. Our team at Lepore Law Group is here to guide businesses through the evolving legal landscape, ensuring compliance and protecting your interests amid these developments.
This memorandum is provided by Lepore Law Group and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.