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    Court Case on Beneficial Owner Reporting

    As discussed in our earlier posts, most recently on February 27, 2024, the Corporate Transparency Act requires many business entities to report information about their beneficial owners in a brand-new government database.

    There has been much attention paid to a recent court decision related to the Corporate Transparency Act, but despite the publicity about the case, the Corporate Transparency Act remains in effect at the present time.

    On March 1, 2024, a decision from a federal court, the U.S. District Court in Huntsville, Alabama, held that the Corporate Transparency Act is unconstitutional and placed an injunction on the U.S. Treasury Department (and any other federal agency), preventing it from enforcing the provisions of the law, but only for those specific businesses that were plaintiffs in this court case. The case is: National Small Business United et al. v. Janet Yellen et al.; No. 5:22-cv-01448.

    As a result, the requirements for business entities to report information about their owners remain in effect for any business entity that was not a plaintiff in the case, as do the substantial civil and criminal penalties that apply for failure to comply with that requirement. While it is possible that an appeal of the decision in this case and/or decisions in separate court cases could affect these requirements, practitioners advising their clients about the requirements of the Corporate Transparency Act should emphasize that there is no way to know what future changes might or might not occur.

    Therefore, at this time, businesses subject to the requirements of the Corporate Transparency Act should plan to meet the filing requirements that still exist under this law. Entities that existed before January 1, 2024 still have until the end of the year to meet the requirement.

    The information provided herein is provided with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional service. As such, M + O = CPE, Inc. and the author disclaim any responsibility or liability for the information supplied herein or the application of said information.