Corporate Transparency Act (“CTA”) Ruled Unconstitutional


As you may have heard, on March 1st, in the case of National Small Business Association vs. Yellen, a federal district court in the Northern District of Alabama found the CTA to be unconstitutional. The plaintiffs in the case, the National Small Business Association (“NSBA”) and one of its members, filed a lawsuit in November of 2022 seeking a permanent injunction against the implementation of the CTA and its related rules. The court, in finding the law unconstitutional, held that Congress acted outside of its constitutional enumerated powers in passing it. Subsequently, on March 11th, the Justice Department filed a notice of appeal of the ruling with the 11th Circuit Court of Appeals.

What does all this mean? The answer is, unfortunately, not terribly much at this point in time. Most importantly, the ruling only granted relief to the plaintiffs, NSBA and Isaac Winkles, a member of NSBA. As a result, FinCen published a notice on its website stating that while the litigation is ongoing, FinCen will continue to implement the CTA and everyone other than the plaintiffs in the NSBA case must still comply with the law.

Perhaps most significantly, for our purposes, a similar case is pending in the U.S. District Court for the Northern District of Ohio. We will keep you updated as further events transpire in this situation.