On March 1, 2024, in the case of National Small Business United v. Yellen, a federal district court in Alabama ruled that the Beneficial Ownership Information (BOI) Reporting Rule of the Corporate Transparency Act (CTA) is unconstitutional.  The court determined that the CTA exceeded the Constitution’s limits on Congress’s power. The court granted a preliminary injunction prohibiting the Financial Crimes Enforcement Network (FinCEN) from requiring the plaintiffs (The National Small Business Association and one of its small business members) to comply with CTA’s beneficial owner filing requirement.  It is widely believed that the United States Department of the Treasury will appeal the ruling.

At this time, the prohibition on enforcing the BOI requirements only applies to the plaintiffs who filed the lawsuit.  Technically, FinCEN is not barred from requiring anyone other than the Plaintiffs from complying with the BOI filing rules.  Thus, if you are required to file with FinCEN before the end of the year (i.e., companies formed on or after January 1, 2024), you should do so, or potentially face penalties. However, if you are like most required filers, you have until January 1, 2025 in which to report beneficial ownership information to FinCEN.  If you fall into this category, it may make sense to wait to file until closer to the deadline as it is likely that we will have more clarity in the coming months about whether the reporting requirements will be enforced against others.