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Corporate Transparency Act Declared Unconstitutional in New Case
- miles 2y agoFTA: > The Corporate Transparency Act, a burdensome new law that would require some 32 million closely held businesses to file invasive information with the Financial Crimes Enforcement Network, has just been declared unconstitutional in National Small Business United, d/b/a the National Small Business Association vs. Janet Yellen, in her official capacity as Secretary of the Treasury, 2024 Mar 1, 2024, U.S. District Court, N.D. of Alabama. > The Court concluded: “The Corporate Transparency Act is unconstitutional because it cannot be justified as an exercise of Congress’s enumerated powers.” Despite being found unconstitutional as well as being especially cruel: > The CTA was enacted as part of the 2021 National Defense Authorization Act and became effective for newly formed entities (called “Reporting Companies”) on Jan. 1, 2024. Entities existing prior to 2024 would have had to complete their first filings by Jan. 1, 2025. The penalties for non-compliance are huge, $500/day plus potentially two years in jail. The information that has to be filed is complex and invasive and would include for each Beneficial Owner of every Reporting Company personal information such as home address, Social Security Number and a copy of a driver’s license or passport. Figuring out which entities are classified as Reporting Companies and which direct or indirect owners or persons holding substantial control over those entities is incredibly complicated. the ruling has been interpreted to exempt only a handful of plaintiffs, specifically: > Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024).