Court Issues Nationwide Injunction on Corporate Transparency Act
On December 3, 2024, in what was not at all surprising, a Texas court issued a preliminary injunction blocking enforcement and staying the compliance date of the Corporate Transparency Act (CTA). The Court found that the CTA is unconstitutional as outside of Congress’s power.
A full discussion of the CTA is included below. The Texas court found that the CTA represents a federal attempt to monitor companies created under state law and eliminates the corporate anonymity feature designed by states charged with regulating corporate formation – both in violation of the U.S. Constitution and its explicit separation of powers.
The court’s opinion is strongly written, determining that the government could not justify the constitutionality of the law, regardless of every attempt. In particular, the Plaintiff’s contend that CTA violates: (i) the Ninth and Tenth Amendments by intruding on State’s rights; (ii) the First Amendment by compelling speech and burdening individuals’ rights of association; and (iii) the Fourth Amendment by
The Corporate Transparency Act – What You Need To Know
Since the January 1, 2024 compliance effective date for the Corporate Transparency Act, I have been inundated with compliance inquiries. Here is what you need to know.
Background
On January 1, 2021, Congress passed the Corporate Transparency Act (“CTA”). The CTA requires all business entities, subject to certain exceptions, to disclose information about the entity and the individual(s) who own such entity and/or have substantial control. The CTA was created to help the United States government combat money laundering, tax fraud and illegal foreign ownership of U.S. businesses. On September 30, 2022, the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a Final Rule on the CTA, explaining what information needs to be disclosed in the form of a Beneficial Ownership Information Report (referred to as a “BOI Report”). For a review of the rule release, see HERE. The BOI Report will become part of a national database on corporate ownership.
The CTA specifically requires entities to file
