On January 1, 2024, the Corporate Transparency Act (CTA) came into effect. The CTA represents a novel regulatory development in the United States that requires a broad class of legal entities (referred to as “reporting companies”) to identify and report beneficial ownership information (BOI) on a confidential basis to a federal, centralized data repository.
On March 1, 2024, a federal judge in the Northern District of Alabama, Northeastern Division, in the case National Small Business United, d/b/a the National Small Business Association, v. Yellen, ruled that the CTA was unconstitutional, at least as it applied to the plaintiffs in that case, which has created questions as to the ongoing validity of the law more broadly. The decision has been appealed.
In this article, written by Jonathan Sagot, Morgan Sawchuk, Igor Voloshin, and Sarah Ashkan, we outline the key facets of the CTA to serve as an initial guide. While the judge’s ruling in National Small Business United has created questions as to the CTA’s enforceability, it is unclear whether that ruling will survive on appeal or whether the scope of that ruling will remain limited to the plaintiffs in that case. For now, it remains worth exploring how the CTA works.
Download "Understanding the Corporate Transparency Act After Small Business United" here.