On March 1, 2024, a United States District Court judge ruled that reporting requirements of beneficial ownership under the Corporate Transparency Act (CTA) are unconstitutional. GHJ recently provided details about the CTA, a new law that became effective on January 1, 2024.

In the recent court case, the plaintiffs sought an injunction against the implementation of the CTA and the court’s decision to grant the injunction is limited to the plaintiffs named in the case. The only parties who are impacted by the decision at the time of this publication are Huntsville business owner Isaac Winkles and the National Small Business United, a trade organization doing business as the National Small Business Administration.

As such, other reporting companies are still obligated to comply with the CTA reporting requirements for now:

• For entities that existed before Jan. 1, 2024, initial reports are due no later than Jan. 1, 2025.
• For entities created on or after Jan. 1, 2024, their initial reports are due within 90 days from the date of creation of the entity.

Financial Crimes Enforcement Network (FinCEN), which is the U.S. government agency in charge of administering the CTA, issued a statement that they will not enforce the CTA against the plaintiffs and the plaintiffs are not required to report beneficial ownership under the CTA.

Although the U.S. government will likely appeal this decision, for now all reporting companies who were not part of the lawsuit mentioned above are still subject to the reporting mandate of the CTA.

GHJ will continue to monitor developments in this case. In the meantime, if you have further questions regarding this topic, please do not hesitate to contact GHJ’s International Tax Practice.