On March 1, 2024, a U.S. District Court judge in Alabama ruled that the newly effective Corporate Transparency Act (CTA) is unconstitutional because it oversteps Congress’ powers under the Constitution. The CTA, which became effective on January 1, 2024, directs the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) to establish a nationwide database of beneficial ownership information for certain legal entities. More information about the CTA can be found here.

This ruling suspends the enforcement of the CTA against the plaintiffs in the Alabama case, but not any other reporting company. It is anticipated that the Department of Treasury will appeal the decision to the U.S. Court of Appeals for the Eleventh Circuit. It is also likely that this decision will lead to “copycat” lawsuits in other jurisdictions.

While the legal proceedings unfold, we will continue to monitor updates about the impact on CTA implementation and enforcement. Until further notice, all other reporting companies are still bound by the CTA and should continue to comply, especially reporting companies that are formed on or after January 1, 2024, due to the shorter 90-day compliance period.

If you have any questions regarding this update or the CTA in general, please reach out to the GCT attorney with whom you work or Morgan C. York.

Golan Christie Taglia, with 30 years of dedicated service, has consistently delivered successful outcomes while prioritizing top-tier quality and personalized attention for clients. With a diverse clientele that includes entrepreneurial ventures, high-net-worth individuals, middle-market businesses and nonprofit organizations, GCT stands as a strong and trustworthy firm for its clients.