On January 1, 2024, the Corporate Transparency Act (CTA) went into effect and requires companies that qualify as “reporting companies” to identify their “beneficial owners”. However, on March 1, 2024 a federal court ruled that the CTA is unconstitutional because it exceeds Congress’ power to regulate commerce under the Commerce Clause of the U.S. Constitution. As a result of this ruling, the plaintiff in that case does not have to comply with the CTA disclosure requirements. However, the court did NOT issue a nation wide injunction.
Compliance with Corporate Transparency Act Still Recommended
Compliance with the Corporate Transparency Act is still recommended by our business attorneys because fines and penalties are costly for noncompliance. While we believe as the case works its way through the appeal process compliance deadlines will most likely be extended, the smart business decision is to comply with the act as currently written because the small administrative burden the act imposes will be greatly outweighed by the potential fines and penalties. Click here to review our prior post on complying with the CTA generally.
If you have any questions regarding compliance, or any other aspect of your business, please feel free to contact Doug Leavitt at Anderson Leavitt.
This entry is presented for informational purposes only and is not intended to constitute legal advice.