Alabama Federal Ruling Exempts Certain Parties from Corporate Transparency Act Compliance

Peter Tirella | 03.06.24

On March 1, 2024, the U.S. District Court of the Northern District of Alabama, Northeastern Division, granted summary judgment in National Small Business United v. Yellen. The case, filed by the National Small Business Association (NSBA) and others, alleged that the passage and enforcement of the Corporate Transparency Act (CTA) exceeded the U.S. Constitution’s limits on congressional power. Judge Liles C. Burke agreed and issued a narrow ruling in favor of the plaintiffs, permanently enjoining enforcement of the CTA against the plaintiffs.

Critically, the ruling does not apply to all businesses. It only applies to the specific plaintiffs, including all members of the NSBA as of March 1, 2024. On March 4, 2024, the Financial Crimes Enforcement Network (FinCEN) issued a release stating that it will comply with the court’s ruling as long as it remains in effect and that it will not enforce the CTA against the plaintiffs. For all other parties, FinCEN will continue to fully enforce the CTA. It is expected that the government will appeal this limited ruling. However, in the absence of subsequent rulings, the fact remains that certain members of the NSBA are not subject to CTA’s reporting requirements while non-members must still comply.

To review guidance on complying with the CTA and whether you are subject to its reporting requirements, please contact your usual Boardman Clark attorney or read our Business Minute articles on the topic, ​“FinCEN Final Rule on Beneficial Ownership Information Reporting,” and ​“Corporate Transparency Act: Proposed Rule May Extend Certain Reporting Deadlines.”

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