I previously notified business clients that, starting 2024, new federal government regulations – known as BOI reporting – requires businesses to disclose their owners or partners.
However, in a surprising turn of events on the evening of March 1, 2024, a federal district court made a decision declaring the Corporate Transparency Act (CTA) unconstitutional, effectively suspending the implementation of the Beneficial Ownership Information (BOI) reporting requirement.
The CTA, which was passed on January 1, 2021, was a component of the 2021 National Defense Authorization Act aimed at combating money laundering and tax evasion. It mandated that certain companies operating in the United States report beneficial ownership information.
However, in 2022, the National Small Business Association, a non-profit corporation based in Ohio, took legal action against the U.S. Treasury Department. They alleged that the mandatory disclosure requirements of the CTA exceeded the authority granted by Congress under Article I of the Constitution and violated multiple constitutional amendments, including the First, Fourth, Fifth, Ninth, and Tenth Amendments.
This ruling marks a significant development in the ongoing debate surrounding financial transparency and regulatory measures aimed at preventing illicit financial activities. The decision by the federal district court has immediate implications for businesses subject to the CTA’s reporting requirements and could potentially lead to further legal and legislative actions to address concerns raised by both proponents and opponents of the law.
Kenneth Athon Tax Strategies 