TheCorporateCounsel.net

In light of the ruling of the District Court for the Northern District of Alabama in National Small Business United v. Yellen (N.D. Ala.; 3/24) finding the Corporate Transparency Act unconstitutional, FinCEN released this notice. It says:

FinCEN will comply with the court’s order for as long as it remains in effect. As a result, 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.

The implication being that FinCEN will continue to enforce the CTA with respect to other entities. The March 1 as of date in FinCEN’s announcement also clarifies that joining the NSBA after the March 1 decision will not shield those new members from enforcement.

This is consistent with some conversations that were already happening on LinkedIn and takeaways in client alerts. This Morgan Lewis memo notes the following:

The injunction against enforcement only applies to the plaintiffs in the Alabama litigation, and despite the holding that the CTA is unconstitutional, the government is entitled to continue to enforce the statute against other entities.

As a result, our recommendations to companies regarding the CTA remains unchanged. Until clearer guidance is provided, companies should continue to comply with the CTA’s BOI reporting requirements.

– Meredith Ervine