An Alabama Federal District Court has found the Corporate Transparency Act and its Beneficial Ownership Interest (BOI) reporting to be unconstitutional. Judge Liles C. Burke concluded that “The Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.”

What now?  This will be a wait-and-see situation as the government appeals the decision and FinCEN decides how to address the decision. But what do we tell our clients?

• There will be no hurry in filing BOI reports for existing entities, as the reports are not due to FinCEN until Dec. 31, 2024. Wait for a FinCEN response.
• For entities created during 2024, the entity has 90 days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI report. This may be problematic unless FinCEN addresses the issue as soon as possible. A likely initial response from FinCEN (and one that was suggested earlier in the year as a transition into the new filing requirement) would be to delay filing for all entities —existing and newly created — until Dec. 31, 2024. If FinCEN does not provide a timely answer for your client and the 90-day timeline is fast approaching, you could recommend that the client file anyway, or hope that a penalty waiver shows up.

Need more info on BOI reporting? See FinCEN’s 50 page Small Entity Compliance Guide here.

You can read the court case here: National Small Business United, et al v. Yellen, et al.