The Corporate Transparency Act (CTA), which mandates new Beneficial Ownership Information (BOI) reporting to FinCEN, has been ruled unconstitutional by a federal district Court in Alabama.

While at this time the direct impact is filing exemptions for plaintiffs in the case, the outcome puts the entire program in question. The ruling will no doubt be appealed and could end up in the Supreme Court. Plaintiffs in the case with filing exemptions include members of the National Small Business Association (NSBA) as of March 1, 2024.

As it will take some time for the dust to settle, we recommend considering the following approach for reporting companies who are not plaintiffs in the case:

• Entities created after January 1, 2024 should continue filing BOI reports within their 90-day deadline.

• Entities created prior to January 1, 2024 might consider pausing on filings while litigation continues, as their deadline isn’t until the end of the year. With that being said, we recommend beginning a filing analysis by end of summer if developments haven’t occurred signaling an end to the BOI reporting program.

More information on BOI reporting can be found HERE.

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Published: 03/07/2024

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