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Corporate Transparency Act Overturned by Federal Court

Corporate Transparency Act Overturned by Federal Court

Member News Industry News/Information

Reporting Requirement Paused Until Appeals Court Hears Case

Members were recently alerted about a new Federal Regulation – known as the Corporate Transparency Act – requiring businesses with 20 full-time employees or those businesses with less than $5 million in sales to report any and all individuals who could be (or are considered) beneficial owners of the organization to the US Department of Treasury and its Financial Crimes Enforcement Network (FinCEN).

BLD Connection is pleased to report that last week, a Federal District Court in Alabama struck down the law, ruling that it is unconstitutional.

Federal District Court Judge Liles Burke issued a stinging rebuke of the law, temporarily blocking beneficial ownership reporting requirements for small businesses that took effect on January 1, 2024. The ruling stems from a legal challenge filed in 2022 by the National Small Business Association alleging that the CTA violates a laundry list of constitutional protections.

While the beneficial ownership reporting requirements on small businesses are blocked for now, the U.S. Department of Justice is expected to appeal the ruling using an expedited process that will send the case to the U.S. Court of Appeals for the Eleventh Circuit.

BLD Connection, in partnership with the National Lumber & Building Material Dealers Association (NLBMDA), will continue to monitor developments on this issue and report any additional updates and/or next steps as they are made available.

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Source : NLBMDA

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