What you should expect as a small business owner who was worried about complying with the FinCEN reporting requirements

If you’ve been staying up-to-date with our emails, you may remember seeing a few different features on the Corporate Transparency Act (CTA). If you need a refresher, you can watch my information session on the subject here. 

On March 1, 2024, a U.S. District Court in Alabama found that the filing requirements brought on by the CTA in National Small Business United d/b/a the National Small Business Association (NSBA) v. Janet Yellen, Secretary of the Treasury.

According to the Court, the CTA’s filing requirement exceeds the limits of Congress’s enumerated powers. In short, this is because the powers in which the CTA was authorized (foreign affairs, the Commerce Clause, and taxation) cannot be applied to the information collected by the Beneficial Ownership Information (BOI) Report. If you are interested in why that is, the Court’s full decision on the case – a 53-page memorandum – can be found here. 

In response, the Financial Crimes Enforcement Network (FinCEN) issued a press release on March 4, 2024. You can read the full release here. The release is succinct and to the point — FinCEN will comply with the decision, and will not enforce the CTA against “the plaintiffs in that action.”

The plaintiffs in question would be (1) an individual named Isaac Winkles, (2) any companies in which Isaac Winkles is a beneficial owner, and (3) members of the NSBA. If that’s not you, FinCEN’s portal for submitting BOI reports is still online and fully operational.  

I can hear you all now:

“Brint, who cares!? What does this mean for me? Do I still need to file?“

My answer? Yes. When in doubt, file.

While some attorneys have interpreted the Court’s finding as a complete halt of the filing requirement, our team continues to recommend that Reporting Companies and Beneficial Owners make preparations to comply with the CTA filing requirements. It’s possible — likely, even — that the government will appeal and request a stay during that process. Even that short press release from FinCEN I linked earlier heavily implies that they expect this court order will be temporary – that being said, we will be closely monitoring this and will keep you apprised of updates as they come in.

For now, if you have a business that was organized/incorporated before January 1, 2024, keep an eye out for more news on the CTA, as you have until December 31 to comply. However, for those who opened businesses after January 1, we highly recommend that you prepare to file before the end of March. In the meantime, please don’t hesitate to reach out to us if you have questions about the CTA, or if you want help complying.