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Corporate Transparency Act Update – March 2024

March 1, 2024

On Friday, March 1, 2024, U.S. District Court granted summary judgment to the National Small Business Association (NSBA), ruling that the Corporate Transparency Act (CTA) is unconstitutional. The lawsuit contended that the CTA unfairly burdens small businesses by requiring them to share personal details with FinCEN. The NSBA also argued that small businesses could face significant costs in the first year of compliance.
 
The summary judgment does not ban the Treasury and any other agency of the federal government from enforcing the CTA. The ruling prohibits CTA enforcement only against the NSBA itself and all of its members. Because the judgement is very narrow in its effect, unless the Treasury Department suspends enforcement of CTA for all businesses required to file, then CTA BOI reports will need to be filed except for the NSBA members to which the decision applies.

At this time, anyone previously required to file BOI reports under the CTA isn’t affected by the summary judgment unless they were a current NSBA member as of March 1, 2024. 
 
It is our view that all reporting companies facing CTA deadlines should consider filing, even if the Federal District Court’s ruling covers them. If the Treasury prevails, businesses will potentially face significant civil fines, interest, and penalties, as well as possible criminal penalties, including jail time if they have not timely filed BOI reports. Filing provides peace of mind and staying in CTA compliance means there’s no chance of facing more stringent financial and criminal penalties for failure to file.

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