Important Update – New Beneficial Ownership Information Reporting is held Unconstitutional

A March 1, 2024 ruling by the Federal District Court (United States District Court Northern District of Alabama Northeastern Division) declared the Corporate Transparency Act (CTA) as unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.  The case, National Small Bus. United v. Yellen, was initiated by the National Small Business Association, an Ohio nonprofit organization representing more than 65,000 businesses from all 50 states, along with Issac Winkles, a member of the organization who is the owner of two small businesses.  The case challenged the mandatory disclosure requirements imposed by the Corporate Transparency Act as exceeding Congress’s authority under Article I of the Constitution.

Although this decision impacts only specific plaintiffs involved, it is expected to be appealed and could have broader implications in the future.

For more information about the new beneficial ownership information reporting under the Corporate Transparency Act that generally requires action in 2024 for both new and existing companies, see our December blog post here

REMINDER – STAY ALERT AGAINST FRAUD

Beware of Fraudsters Attempting to Obtain Your Information

Fraudsters are exploiting the changes in the Corporate Transparency Act to obtain information illicitly.  Be cautious of any communication titled “Important Compliance Notice” or requesting you to click on a URL or scan a QR code. FinCEN warns that such emails or letters are fraudulent. FinCEN does not initiate unsolicited requests for information. If you are required to report beneficial ownership information under the CTA, you will provide the information electronically directly to FinCEN on their website (www.fincen.gov/boi).

WARNING:  PHONY Form 4022 SCAM

A fraudulent Form 4022 “Mandatory Beneficial Ownership Reporting” is circulating, requesting owner information and a “filing fee.”  This scam is aimed at obtaining your information and money!  Remember FinCEN does not initiate unsolicited requests for information. Report beneficial ownership information directly to FinCEN electronically at www.fincen.gov/boi if required under the CTA.