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The United States District Court for the Northern District of Alabama recently declared the Corporate Transparency Act (CTA) unconstitutional in an action brought by National Small Business Association (NSBA) and one of its members. The Court determined that the CTA exceeded the limits of Congress's legislative power and lacked a sufficient nexus to any enumerated power in the Constitution. 

The Court rejected the government’s argument that the CTA was within the ambit of the Constitution’s Commerce, Taxing, and Necessary and Proper Clauses, along with Congress’ foreign affairs and national security powers and enjoined the Treasury Department and FinCEN from enforcing the CTA against the NSBA and its members. 

FinCEN has indicated that it will not require the NSBA or its members to file beneficial ownership information reports at this time. All other reporting companies remain subject to the CTA’s reporting requirements, unless exempt. 

It is expected that this litigation will continue through the appeal process. 

For a description of the reporting obligations under the CTA, please see our prior client alerts

If you have any questions you would like to discuss with respect to the CTA, please contact one of the attorneys listed below. 

Brian S. North
Securities & SEC Practice Group Co-Leader
(215) 665-3828
Jared Johnson
Business Tax Practice Group Leader
Family Office Practice Group Co-Leader
(215) 665-5357
Steven W. Smith
(215) 665-3607

Jennifer Rodriquez
(954) 468-2334
Robin L. Dierbeck
Senior Attorney
(202) 452-5475