Breaking News: Federal Court Ruled Corporate Transparency Act Unconstitutional – Beneficial Ownership Information Reporting on Hold

In Friday’s decision, District Court Judge Liles C. Burke ruled that the CTA is an unconstitutional exercise of Congress’ enumerated powers and granted the plaintiff’s motion for summary judgment, with a final judgment expected to follow. The scope of the Court’s decision is, as of this writing, limited only to the plaintiffs in this case. For the time being, the Court’s decision leaves the CTA and BOI landscape in limbo as there is almost certainly going to be further developments in this case. In a recent press release, FinCEN clarified its position that the CTA remains in effect for all other reporting companies. Stay tuned for further developments as they arise.

In a surprise decision Friday night, a federal district court ruled that the Corporate Transparency Act (“CTA”) is unconstitutional, effectively placing the Beneficial Ownership Information (BOI) reporting on hold. By way of background, the CTA was enacted on January 1, 2021 as part of the 2021 National Defense Authorization Act as an attempt to prevent money laundering and tax evasion by requiring new reporting for certain companies doing business in the U.S.

In 2022, the National Small Business Association, an Ohio non-profit corporation, sued the US Treasury Department alleging the mandatory disclosure requirements exceed Congress’ authority under Article I of the Constitution and violate the First, Fourth, Fifth, Ninth, and Tenth Amendments. See National Small Business United et al v. Yellen et al, Case Number:5:22-cv-1448-LCB.

In Friday’s decision, District Court Judge Liles C. Burke ruled that the CTA is an unconstitutional exercise of Congress’ enumerated powers and granted the plaintiff’s motion for summary judgment, with a final judgment expected to follow. For the time being, the Court’s decision leaves the CTA and BOI landscape in limbo as there is almost certainly going to be further developments in this case. Stay tuned for further developments as they arise.